Prithvi Information Solutions Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)
The Customs Excise and Service Tax Appellate Tribunal, Hyderabad Bench, decided an appeal filed against an order confirming a demand of ₹16,78,11,565 towards irregularly availed Cenvat credit along with an equal penalty under Section 78. The appellant company was engaged in providing taxable services and also operated a manufacturing unit. It maintained centralized service tax registration and functioned through multiple divisions including a software division, telecom engineering services division, and telecom products division. The telecom products division imported telecommunication equipment in CKD form, assembled it, embedded necessary software, and supplied it to BSNL while paying Central Excise duty as a manufacturer.
Based on specific intelligence regarding irregular availment of credit, the department initiated proceedings and examined documents and statements. Investigation revealed that the appellant had availed Cenvat credit relating to certain Bills of Entry that had already been used by the manufacturing unit to discharge Central Excise duty, resulting in double availment of credit. The imported telecom equipment and software were found to have no nexus with the services provided by the appellant. Consequently, credit of duties paid on these goods and software was considered ineligible for payment of Service Tax.
