CENVAT Credit on Input Services availed after two years - Revenue applying rules in respect of Inputs whereas dispute is in respect of Input service - there is no bar of taking credit subsequent to payment for consideration of input service - stay granted: CESTAT
By TIOL News Service
MUMBAI, FEB 11, 2013: ONLY recently we reported the CESTAT decision 2013-TIOL-216-CESTAT-MUM where the Bench while setting aside the order of the lower authority had held that there is No time limit in the CEVNAT Credit Rules for taking credit on “Inputs” & if a manufacturer does not take credit as soon as inputs are received in factory, word 'immediately' in rule 4(1) does not mean nor is it intended to mean that benefit would be denied.
In the present case, the lower authorities have extrapolated this allegation to “input services” too and sought to deny the CENVAT credit availed.
The applicant has been denied the CENVAT Credit of approximately Rs.47 lakhs availed in respect of GTA service and imposed with interest and penalty on the ground that the same has been availed after two years from the date of receipt of the service and not IMMEDIATELY.
Since the lower appellate authority upheld the order of the adjudicating authority, the applicant, a Larger Tax payer, is before the CESTAT.
It is submitted that the adjudicating authority applied the rule which is applicable to the credit in respect of inputs whereas the dispute in the present case is in respect of credit of the service tax paid on taxable service by the applicants. In respect of GTA service, the recipient has to pay service tax. The applicants being recipient of GTA service paid the service tax and availed the credit. The proviso to rule 4(7) of the CCR, 2004 is also adverted to and wherein it is mentioned that -
“ Provided that in case of an input service where the service tax is paid on reverse charge by the recipient of the service, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9:”
Since in the case on hand, credit has been availed after the date of payment of the value of input service, the demand is not sustainable, the appellant submitted.
The Revenue representative submitted that credit has been availed after two years from the receipt of the service and, therefore, it cannot be said that whether the input services are in relation to the manufacture of goods or not and hence credit has been rightly denied.
The Bench observed -
“5. We find that the adjudicating authority in the impugned order applied the relevant rules in respect of inputs whereas the dispute is in respect of credit of input service. As per the CENVAT Credit Rules there is no bar of taking credit subsequently to the payment for consideration of input service, therefore, prima facie the applicants have a strong case in their favour. The pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeals....”
In fine, the stay petitions were allowed.
In passing: The following is the rationale in setting up LTU as mentioned on the website - The underlying commitment is of providing better service to the taxpayer, through personalized attention, quality of service, transparency in transactions and cordial atmosphere. This will reduce tax compliance cost, reduce delays and ensure uniformity in the matters of tax/ duty determination.
(See 2013-TIOL-259-CESTAT-MUM)
