Service tax credit cannot be taken when service tax has not been shown to have been paid by service provider
CASE LAW DETAILS
Decided by: CESTAT, WEST ZONAL BENCH, MUMBAI, In The case of: Ahmednagar Merchants Co-operative Bank Ltd. v. CCE, Appeal No.: Appeal No. ST/141/08 & E/7/4/2008, Decided on: May 4, 2009
7. I have considered the rival submissions carefully. I find that both the lower authorities, after perusing the documents produced before them by the appellants, have come to the unanimous conclusion that these do not bear Service Tax Registration No. or details of taxable service, taxable value and Service Tax amount etc. and nowhere the Service Tax has been shown to have been charged to the appellants. The appellants have also not submitted before me any evidence contrary to above. They only pointed out that they have tried their level best to get the documents corrected to the effect that these should contain the Service Tax amount and the Service Tax Registration number separately but due to large number, they could not do so. It is obvious that Service Tax credit cannot be taken when the Service Tax has not been shown to have been paid by the Service provider. Vide Notification No. 30/2004-ST dated 22.9.2004, any document irrespective of the fact whether or not serially numbered and whether or not containing other information in such document as required in sub-rule(1) of Rule 4A of the Service Tax Rules, 1994 is a valid document for taking credit. However, it is seen that even the proviso inserted to Rule 4A of the Service Tax Rules, 1994 vide Notification No. 30/2004-ST dated 22.9.2004 is of no help to the appellants because the crucial information and the material particulars required for availing credit of service tax are not available in the documents, as has been rightly pointed out by the learned SDR. Hence, these documents are not valid documents to avail the credit because of the non-fulfillment of the requirements of the provisions of Rule 4A of the Service Tax Rules, 1994 read with Rule 9 of the Cenvat Credit Rules, 2004. The appellant’s contention that they have substantially complied with the provisions of the Cenvat Credit Rules is not correct and is not borne out from the records. Hence, the Cenvat Credit has been rightly disallowed to the appellants and the deemed has been rightly confirmed.
8. As regards the second issue raised by the appellants, I do not find any merit in the same. It is on record that the appellants have taken the impugned Cenvat credit and have also utilized it for discharging their Service Tax liability as Output service provider. Once it is found that the Cenvat credit was irregularly availed by the appellants and by implication to that extent the Service Tax on the Output service was short paid, it has to be recovered under Rule 14 of the Cenvat Credit Rules, 2004. Rule 14 of the Cenvat Credit Rules, 2004 states as under:-
“where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis for effecting such recoveries.”
Therefore, the show cause notice invoking the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with section 11A of the Central Excise Act, 1944 and section 73 of the Finance Act, 1994 and read with section 11AB of the Central Excise Act, 1944 and section 75 of the Finance Act, 1994 for recovery of irregularly availed Cenvat Credit and demanding interest respectively is perfectly in order and is within the framework of law. For the same reasons, proposal in the show cause notice to impose penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1944 and section 76 of the Finance Act, 1994 cannot be faulted. The appellant’s averments in this regard lack substance and are devoid of any merit. The appeal filed by the appellants is rejected. The impugned order passed by the Commissioner (appeals) is upheld.