Chakraborty Enterprise Vs Commissioner of C.G.S.T. and Central Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, allowed the appeal partly by setting aside a major service tax demand, interest, and penalty, while upholding limited liabilities. The dispute arose from audit findings for the period 2012–13 to 2015–16, where the department alleged short-payment of service tax on advances, reverse charge services, additional realization, and renting of immovable property. A show cause notice was issued, and the adjudicating authority confirmed demands with interest and penalty, which were upheld by the Commissioner (Appeals).
The appellant primarily challenged the demand of ₹14,22,561/- on advances. The Tribunal found that the demand was raised by invoking the extended period of limitation, despite the appellant being registered, filing ST-3 returns, and maintaining records such as balance sheets and profit and loss accounts, which were examined during audit. It observed that the entire demand was based on disclosed records, with no evidence of suppression, fraud, or intent to evade tax. Consequently, the Tribunal held that the extended period was not invocable and set aside the demand as time-barred.
On merits, the Tribunal also considered the appellant’s claim for CENVAT credit of ₹15,49,940/- paid to a subcontractor. It noted that the payment of service tax was undisputed and that the appellant was otherwise eligible for credit. The denial of credit was based solely on non-disclosure in ST-3 returns and delay in availing the credit. The Tribunal held that CENVAT credit is a substantive benefit and cannot be denied merely due to procedural lapses such as non-reporting or delayed availment, especially when eligibility and payment are not in dispute.
