KEC International Vs Commissioner of CGST & Central Excise (CESTAT Chandigarh)
No ‘Suppression’ Without Mens Rea: CESTAT Holds Extended Limitation Inapplicable Where Assessee Disclosed CENVAT Reversal
The appellant undertakes works contracts for electricity distribution companies. It had certain taxable and exempted services. It reversed pro rata/ proportionate CENVAT Credit in terms of the formula provided under Rule 6(3)(II) of the Cenvat Credit Rules, 2004. It reversed credit taking into account “common input Service”. Revenue sought reversal on “total CENVAT Credit”. Show cause notice dated 28.09.2020 was issued for period up to 01.04.2016. Demand of about Rs.19 crores along with interest and penalty were confirmed. Hence; appeal.
Hon’ble CESTAT, Chandigarh set aside the demand and allowed the appeal. It held: (i) the expression “suppression of facts” is coupled with mens rea; (ii) the Supreme Court in Pushpam Pharmaceuticals held that it has to be something more than mere non-disclosure; (iii) the appellants have informed about reversal and the revenue could have sought details about the quantum of reversal; (iv) inaction on part of the Department cannot be construed as suppression of facts; (v) follows decision in G. D. Goenka case to hold that demand is time barred; (vi) though matter is argued to be covered on merits as well; no finding is returned on merits.
