TaxTMI 
TaxTMI 
2021 (12) TMI 1533
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....vat credit on the basis of documents issued by National Payment Corporation of India Ltd. (in short NPCI) in respect of service tax paid on 'Interchange Fee', which was not a proper document to avail Cenvat credit as interchange fee was charged by other banks and not by NPCI, officers of Directorate General of Central Excise Intelligence, Mumbai Zonal Unit, initiated investigation and called for month-wise details of Cenvat credit availed by them in respect of ST paid on 'Interchange Fee' on the basis of invoices issued by National Payment Corporation of India Ltd./Extranet/ etc. 2.2 On scrutiny of records and after completion of investigation it was observed that appellant have availed Cenvat credit on the interchange fee and the same was not admissible. (in Rs.) Period Amount of Interchange Fee Cenvat credit Availed (50% of Cenvat credit availed) Cenvat Credit availed and to be reversed by HDFC Oct 11 to Mar 12 130,60,07,562 6,72,59,390 6,72,59,390 Apr 12 to Mar13 255,00,46,950 15,75,92,903 15,75,92,903 Apr 13 to Mar14 269,72,47,862 16,66,89,917 16,66,89,917 Apr 14 to Mar 15 288,46,09,074 17,82,68,840 ....
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....filled for availing CENVAT Credit by provider of output service: a. Cenvat Credit shall be taken by the provider of output service or input service distributor, as the case may be on the basis of an invoice, a bill or challan issued by a provider of input service on or after the 10th day of September, 2004; b. The provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input service has been procured is recorded; c. Every person providing taxable service, shall issue an invoice, bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of such taxable service provided or agreed to be provided; and in case the provider of taxable service is a banking company, an invoice, a bill or as the case may be, challan shall include any document, by whatever name called, whether or not serially numbered, and whether or not containing address of the person receiving the taxable service but containing other information in such documents as provided u....
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....issible. 3.1 We have heard Shri Nitin Tagade, Joint Commissioner, Authorized Representative for the revenue and Shri Abhishek Rastogi and Shri Pratyush Shah, Advocates for the respondents. Both sides have also filed written submissions which have been taken on record. 3.2 Arguing for the revenue learned Authorized Representative while re-iterating the submissions made in appeal, submitted as follows: ⮚ In the instant case, it appears that the conditions prescribed for availing the CENVAT Credit were not fulfilled in as much as: o Respondent had not received any bill, challan, invoice as prescribed under proviso to Rule 4A of Service Tax Rules 1994 from the service provider namely the acquiring banks. o As no such invoice was received the condition that credit can be availed on receipt of such document was not fulfilled. The third and the o The document against which the CENVAT credit has been availed is not the one issued by the person providing the taxable service. Credit has been availed against the document/ statement issued by the NPCI o In the absence of above the credit availed by respondents is against the express leg....
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....in his interpretation of treating the statements issued by NPCI as invoice for availing credit. Rule 4A of Service Tax Rules 1994 and the proviso to the said Rule stipulates the document required to be issued by a person providing taxable service and the said document could be an invoice, a bill or a challan signed by the authorised person or the person providing the taxable service. It does not stipulate the document on the basis of which Cenvat Credit can be availed. Hence, the interpretation of the adjudicating authority that the provider exams the banking company and financial institutions to the extent that they could avail credit based on any document is totally incorrect. ⮚ The adjudicating authority has also relied on Rule 9(2) of Cenvat Credit Rules for arriving at his conclusion. Rule 9(2) states that no Cenvat Credit under sub-rule(1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document, and if the said document does not contain all the particulars but contains the details of duty or Service Tax payable, description of the goods o....
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.... been issued by the service providers and on the basis of 'statements' of NPCI. ⮚ Respondent is in appeal before Hon'ble CESTAT against orders confirming applicability of Service Tax on interchange fees in Appeal Nos ST/85744/2014, ST/85640/2016, ST/86995/2018, ST/87001/2018 and ST/87002/2018. The issue involved in the appeals filed by the respondents is that they had collected interchange fee totalling Rs. 8,06,66,65,515/- during the financial years 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 and 2012- 13 (upto June, 2012), whereupon they were liable to pay service tax totalling Rs. 87,95,55,556/-. On being pointed out, respondent paid the same along with the accrued interest of Rs. 28,26,50,508/-under protest. Show cause notices were issued to them and demands were also confirmed therein. In reply to these SCNs, the respondents had pleaded that interchange fee was a portion of the merchant service fee, which was already subjected to tax at the hands of the acquiring bank. It was not a separate consideration received by them. The levy of tax again would be a re-tax on a portion of the same consideration. This was against the principles of taxation and a tax burden ....
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....referred for constituting an appropriate bench. In this matter, Hon'ble Supreme Court has examined the following judgements o ABN Amro Bank v. Collector of Central Excise - 2011-TIOL-1147-CESTAT-DEL, o ABN Amro Bank (Presently Royal Bank of Scotland) v. Commissioner of Central Excise - 2018-TIOL- 2018-CESTAT, o Standard Chartered Bank & Others Vs CST, Mumbai-I and Others - 2015-TIOL-1713-CESTATDEL- LB [wherein HDFC Bank was also an appellant], and o ABN Amro Bank NV (Presently known as Royal Bank of Scotland NV Vs Commissioner of Central Excise, Customs and Service Tax, Noida - 2018-TIOLl-2811- CESTAT ⮚ Thus, it appears that Service Tax on interchange fees is under dispute in overall banking industry and it is not likely that even other banks might have paid service tax on interchange fees. The claim of the respondent that they have taken CENVAT Credit of the Service Tax paid by the acquiring banks therefore needs to be substantiated with documentary evidence. ⮚ The matter may be remanded back to the original authority for verification of the documents on the basis of which the CENVAT credit was availed by the ....
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....vice Tax Switching Fees + Service Tax Debit Credit Debit Credit Debit Credit Issuer Acquirer Issuer Acquirer Issuer NPCI All amounts in (*) 3.4.3 Non-Financial - Card-to-Card Fund transfer Table 3: Settlement entries for card-to-card fund transfer transactions (Net of reversals, if any) This report (NTSL/DSR) will indicate the net settlement position for each of the members along with their sub members. The net settlement amount may be a debit or a credit. If the net settlement position is a debit amount, it indicates that members' issuing transactions are more than its acquiring transactions and vice versa. The net settlement amount would include transaction amount, net dispute/adjustment amount, late reversals, interchange fees, penalties, customer compensation amount, service tax, and switching fees. ⮚ The Acquiring Bank would receive Acquiring Fee (also known as 'interchange fees') from the issuing bank . NPCI collects the acquiring fee from the Issuing Bank along with applicable tax and pass the same to Acquiring Bank;. ⮚ NPCI do not charge Interchange Fee but....
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....icity India Pvt. Ltd. vs CCE, Jaipur [2019 (27) GSTL 687] wherein the Principal bench of CESTAT while allowing CENVAT credit on the basis of a document issued by DMRC to the Appellant which was contrary to rule 4A(a) of the Service Tax Rules, held that such documents can be considered as an invoice and accepted by jurisdictional authority in terms of proviso to Rule 2(2) of the CENVAT Rules. ⮚ NPCI is a service provider and acts on behalf of acquiring banks to issue statements containing details such as service tax registration number of the acquiring bank, service tax and cess collected from the Respondent Issuing Bank and remitted to the Acquiring Bank. ⮚ Mr Sanjay Saxena, Chief Financial Officer of NPCI has in his statement stated that * Interchange fee is charged by Acquiring Banks from Issuing Banks. * NPCI does not raise any invoice in respect of interchange fee and service tax payable thereon. * NPCI provides a settlement report which contains amongst other information, interchange fee and service tax leviable thereon. * NPCI provides monthly service tax applicable thereon which contains details of interchan....
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....of cenvat credit * Tata Motors Ltd. [2013 (294) ELT 394] * Premier Alloys Ltd. [2017(6)TMI 109 (All HC)] * M/s. Ellen Industries and Ors. [2019(3)TMI 781- CESTAT CHENNAI) * Zapak Digital Entertainment Ltd. [2017 (12) TMI 1096 - CESTAT MUMBAI] * M/S. Sthirlaxmi Excavation LLP [(2019 (11) TMI 1619 - CESTAT KOLKATA)] 3.24 Extended period of limitation cannot be invoked in the present case as per the following decisions: * Tamil Nadu Tourism Development Corporation Ltd. [2018 (19) GSTL 50 (Tri. Chennai)] * Enzal Chemicals India Pvt Ltd. vs CCE, Bharuch [2018(364) ELT 663 (Tri. Ahmd)] * Nestle India Ltd. vs. Commr. Of CE [(2009) 235 ELT 577]; * Padmini Products vs. Collector of CE [(1989) 43 ELT 195]; * Collector of CE, vs. Chemphar Drugs and Liniments [(1989) 40 ELT 276]. ⮚ Normal period of limitation should be 18 months and not 30 months as have been held in Coastal Housing [2021 (8) TMI 83 - CESTAT Bangalore] and Aveco Technologies Pvt. Ltd. [2018 (2) TMI 1269 - CESTAT Hyderabad] ⮚ In Karur Vysya Bank Ltd (Supra) while dealing with similar facts, CENVAT credit ....
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.... than 100 banks are registered with NPCI for availing this facility. The bank which issues the ATM card is known as the issuer bank while the bank at whose ATM the customer withdraws his money is called as acquiring bank. 4.5 A typical transaction flow in NFS involves the customer visiting the ATM of acquiring bank and entering his ATM card and PIN for withdrawing cash. The acquiring bank's system sends the details entered by the customer through NPCI protected network to NPCI. NPCI checks the card details to identify the issuer bank and sends the details to the said bank. The issuer bank validates the card and confirms the details to NPCI and through them to the acquiring bank. Following this the ATM machines prompts the customer to withdraw cash and customer enters the amount that he seeks to be withdrawn. Acquiring bank sends the details entered by the customer to NPCI who forwards it to the issuer bank to verify whether the requested amount is available in the customer's account. If transactions can be allowed, the amount is debited in the customer's account and messages passed on through NPCI to the acquiring bank for dispensing of cash. NPCI will debit th....
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....or, as the case may be, challan shall be serially numbered and shall contain the following, namely, (i). The name, address and the registration number of such person, (ii). The name and address of the person receiving taxable service, (iii). Description and value of taxable service provided or agreed to be provided (iv). The service tax payable thereon; Provided that in case the provider of taxable service is a banking company or a financial institution including a non-banking financial company providing service to any person, an invoice, a bill or, numbered, and whether or not containing address of the person receiving taxable service but containing other information in such documents as required under this sub-rule. 4.9 Thus it can be seen that the document is required to be issued by a person providing taxable service and the said document could be an invoice, a bill or a challan signed by the authorized person of the person providing the taxable service. The proviso to the rules make an exemption for banking company and financial institutions to the extent that they could avail credit based on any document, called by whatever name containing all information specified i....
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.... 9(2)- No cenvat credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document: Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, [assessable value, Central Excise or Service tax registration number of the person issuing the invoice, as the case may be,] name and address of the factory or warehouse or premises of first or second stage dealers of [provider of output service], and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the cenvat credit". 4.12 Based on the above discussion, I hold that the contention in the Show Cause Notice to the effect that assessee is not eligible for availing cenvat credit in as much as the document based on which it was availed was issued by NPCI, would not ....
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....ction over the factory of a manufacturer or provider of output service intending to take CENVAT credit, or the input service distributor distributing CENVAT credit on input service, is satisfied that the duty of excise or service tax due on the input or input service has been paid and such input or input service has actually been used or is to be used in the manufacture of final products or in providing output service, then, such Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall record the reasons for not denying the credit in each case. (6) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input service has been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit. (4) .............. 4.4 Rule 4A of the Service Tax Rules, 1994 states as follows: 4A....
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....rson providing taxable service shall issue an invoice, bill or, as the case may be, a challan signed by such person or a person authorised by him in respect of such taxable service provided or agreed to be provided; and in case the provider of taxable service is a banking company, an invoice, a bill or as the case may be, challan shall include any document, by whatsoever name called, whether or not serially numbered, and whether or not containing address of the person receiving the taxable service but containing other information in such documents as provided under relevant rule. 4.7 Commissioner has while adjudicating the case recorded as follows: "4.4 The first aspect to be considered is the nature of business done by the assessee and the role played by the NPCI in facilitating the same. NPCI has been established by Government of India as a institution for developing and facilitating retail banking system in the country, NPCI provides the facility of National Financial Switch (NFS) to interconnect the automatic teller machines (ATMs) across the country. And NFS, in turn, facilitates routing of ATM transaction by providing interconnectivity of switches of member banks,....
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....vided the service which warrants the payment of interchange fee by the noticee. It is also not in doubt that the said services were utilized by the noticee and facilitation was given to the customers of the noticee to utilize the ATMs in the network of the acquiring banks for purpose of withdrawal of cash. There are also no disputes as to whether the input services provided by acquiring banks have been used by the assessee for generating a taxable output service. The only area of dispute is relates to the Authority of NPCI to issue the document and the propriety of assessee availing credit based on the said document. 4.8 Rule 4A of Service Tax Rules, 1994 lays down the documents based on which credit can be availed and specifies content which should be available in the said documents. The relevant portion of the said Rule states as follows. Every person providing taxable service shall not later than [thirty days] from the date of [completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him ....
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....y purposes. The presence of NPCI is mandated keeping in view the necessity of having an organization which could coordinate the functioning of the various member-banks in the field of retail banking business and to provide state of the art facilities for the consumer. 4.10 It is not in dispute that acquiring banks have paid the duty amount as indicated in the document issued by NPCI and also provided the required input services to the assessee (issuing bank). It is also not in dispute that the document provided by the NPCI provides all the details/data required to be given in invoice/challan/bill as stipulated in Rule 4A of the Service Tax Rules, 1994. In these circumstances it would be grossly unfair to deny the credit solely for the reason that the document is issued by NPCI especially given in context where the role of NPCI in the functioning of retail banking etc. has been approved by RBI and they are working in close coordination with Central Bank. In these circumstances, I tend to agree with the contention of the assessee that credit should not be denied solely due to a minor technical matter when all the other parameters required for availment of credit have been fu....
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....in respect of Interchange Fee and the Service Tax payable thereon, however, NPCI do provide daily settlement report which contains amongst other information the Interchange Fees and Service Tax thereon. From the above statement the obvious conclusion is that NPCI is not paying any service tax the credit, but only engaged in issuing of the certificate against which the CENVAT Credit has been availed by the respondent. If the NPCI was not issuing any invoices in respect of this amount claimed as credit, these amount would not reflect in the ST-3 returns filed by NPCI. In case there is anything contrary to this the same needs to be established from the ST-3 returns filed by NPCI during the relevant period. In the case of Karur Vyasa Bank, heavily relied upon by the respondent counsel during the argument of the case bench has specifically recorded as follows: "5.3 The assessee as a Member Bank, has entered into an agreement with NPCI, wherein, NPCI has agreed to provide intermediary network switching and other support services, as may be required, for accounting and settlement of transactions made on the Automated Teller Machines (ATM) and integrating the same with the account....
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.... NPCI, the same should be reflected in the ST-3 returns filed by the acquiring bank. The admissibility to credit shall depend on establishment of proper documentary trail evidencing the payment of service tax claimed as CENVAT Credit by the respondent. In case the payment of the service tax cannot be established through proper documentary trail the CENVAT credit as claimed by the respondent cannot be allowed on the basis of the subjective satisfaction as recorded by the Commissioner in para 4.10 of the impugned order. 4.12 Before we further proceed it is evident that the payment of service tax on the input services claimed as CENVAT credit is basic feature of the CENVAT Credit scheme. Rule 9 provides the manner for establishment of the claim for such payment. Rule 9 prescribes the documents which can be relied for the purpose of establishing the claim of such payment of the service tax. Rule 9 is prescription of the document against which the credit can be claimed and do not relax the requirement of payment of the service tax, credit of which is claimed. If the document falls within the category of the documents prescribed the same are accepted as direct evidence of payment, but....
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....or equity, what the legislature intended to be done or not to be done can only be legitimately ascertained from what it has chosen to enact either in express words or by reasonable and necessary implication. It is apt to remember the words of Lord Salmon in IRC v. Ross Minister Ltd. (1979) 52 TC 160 (HL). It is stated, "however, much the courts may deprecate an Act, they must apply it. It is not possible by torturing its language or by any other means to construe it so as to give it a meaning which Parliament clearly intend it to bear." We may also add that where the Legislature clearly declares its intent in the scheme of a language of Statute, it is the duty of the Court to give full effect to the same without scanning its wisdom or policy and without engrafting, adding or implying anything which is not congenial to or consistent with such express intent of legislature. Hardship or inconvenience cannot alter the meaning employed by the Legislature if such meaning is clear on the face of the Statute. If the Statutory provisions do not go far enough to relieve the hardship of the member, the remedy lies with the Legislature and not in the hands of the Court." 4.14 We also take n....