Antares Services Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Chandigarh)
Summary: The Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal considered whether CENVAT credit could be denied merely because it was not reflected in the ST-3 Returns and was availed beyond the prescribed period of six months or one year. The appeal arose from an order confirming service tax demand against M/s Antares Services Pvt. Ltd. for the period 2014-15 to 2016-17.
The appellants were registered for “Manpower Recruitment/ Supply Agency Service” and “Commercial Training or Coaching Service”, though during the relevant period they provided only Manpower Recruitment/ Supply Agency Service. An audit of their records noticed that ST-3 Returns had not been filed for April 2014. The Department thereafter issued a show-cause notice relying, inter alia, upon data supplied by the Income Tax Department and alleged that service tax of Rs.6,72,669/- was recoverable along with interest. The appellants contended that they possessed sufficient CENVAT credit and had discharged the service tax liability. The Department disputed the availability of such credit on the ground that the credit had been taken on invoices beyond the permissible period.
The appellants submitted that they had availed input services including Renting of Property, CA Services and services from Monster.Com for providing their output services. They contended that service tax had been discharged on the cum-tax value under Section 67(2) of the Finance Act, 1994, resulting, according to them, in excess payment of service tax by Rs.6,781/-. They also relied upon the CENVAT Credit Rules, 2004 and contended that the demand was based on third-party information.
The appellants further challenged the invocation of the extended period of limitation. They submitted that the demand related to 2014 to 2017 and that there was no suppression of material facts. The record contains an inconsistency regarding the date of the show-cause notice: the factual narration records 13.11.2019, whereas paragraph 3 states 31.11.2019. The appellants relied upon Chemphar Drugs & Liniments, Padmini Products, Pushpam Pharmaceuticals Company, Uniworth Textiles Ltd. and Continental Foundation Jt. Venture on the issue of limitation.
The Department, on the other hand, relied upon the ST-3 Returns for April to September 2014 and submitted that CENVAT credit had not been shown under Heading D-1, while payment in cash had been shown in D-1.
The Tribunal identified the principal issue as whether CENVAT credit was unavailable because it had not been mentioned in the ST-3 Returns and because it had been taken after the prescribed period of six months or one year, with the latter period applying from 01.03.2015. The appellants pointed out that the Department had not disputed the actual availment of the input services or the eligibility of the credit itself.
The Tribunal noted the Commissioner’s finding that CENVAT credit on inputs and input services could be availed only within six months or one year from the date of invoice and that the credit had also not been claimed in the ST-3 Returns. However, relying upon M/s Origin Learning Solutions Pvt. Ltd., the Tribunal held that CENVAT credit could not be denied merely because the availment was not reflected in the ST-3 Returns. The Tribunal further observed that Tribunal and High Courts had consistently held that substantive eligibility to CENVAT credit could not be denied on the basis of procedural violations.
The Tribunal found it undisputed that the appellants had availed the services, paid service tax on them and possessed documents evidencing such availment. On that basis, it held that the credit could not be denied merely because it had been utilized late. The Tribunal also took note of the amendment under which the time limit for taking CENVAT credit was extended from six months to one year with effect from 01.03.2015. The relevant amendment is contained in Notification No. 6/2015-Central Excise (N.T.) dated 01.03.2015.
On limitation, the Tribunal found that the show-cause notice had been issued on the basis of third-party information. Although the extended period had been invoked, no evidence of suppression, mis-statement, fraud or collusion had been placed on record. The Tribunal therefore held that the extended period could not be invoked. It relied upon Balaji Machinery, where it had been held that a demand merely based upon data obtained from the Income Tax Department could not, without more, establish suppression for invoking the extended period.
Consequently, the Tribunal held that the impugned order was not legally sustainable and allowed the appeal both on merits and limitation.
Cases Discussed
- Sapanda Spoorthy Financial Ltd. – 2016 (06) LCX 0169.
- J.R. Herbal Care India Ltd. – 2010 (03) LCX 0058.
- M/s Origin Learning Solutions Pvt. Ltd. – 2021-TIOL-417-CESTAT-MADRAS.
- Balaji Machinery – 2022-TIOL-778-CESTAT-KOLKATTA.
- Chemphar Drugs & Liniments – 1989 (40) ELT 276 (SC).
- Padmini Products – 1989 (43) ELT 195 (SC).
- Pushpam Pharmaceuticals Company – 1995 (78) ELT 401 (SC).
- Uniworth Textiles Ltd. – 2013-TIOL-13-SC-CUS.
- Continental Foundation Jt. Venture – TIOL-1312-CESTAT-MUM.
FULL TEXT OF THE JUDGMENT/ORDER OF CESTAT CHANDIGARH
The appellants, M/s Antares Services Private Limited, have registered themselves for provision of services like “Manpower Recruitment/ Supply Agency Service” and “Commercial Training or Coaching Service”; however, during the impugned period i.e. 2014-15 to 2016-17, they provided only Manpower Recruitment/ Supply Agency Service; A.G, Audit conducted an audit of the records of the appellants and noticed that the appellants have not filed ST-3 Returns for the period April 2014; Department issued a show-cause notice dated 13.11.2019 to the appellant, inter alia, relying on the data supplied by the Income Tax Department; it was alleged that service tax of Rs.6,72,669/- should be recovered from them along with interest; the appellants contented that they have enough credit to pay the demanded service tax and have discharged the same whereas Department contended that the appellants have taken credit on the invoices beyond the permissible period of one year and therefore, credit is not admissible; the demand raised in the said show-cause notice was confirmed by the Original Authority and upheld by the Appellate Authority. Hence, this appeal.
2. Shri Om Prakash, learned Counsel for the appellants, submits that the appellants have availed input services like Renting of Property, CA Services, Service from Monster.Com etc. and utilized the same for provision of output services; they have paid discharged duty on the cum-tax value in terms of Section 67(2) of the Finance Act, 1994 and have in effect paid service tax excess by Rs.6,781; it was not correct for the Commissioner (Appeals) to deny the credit on the ground that it was taken beyond a period of six months; in terms of Rules 3 & 4, the appellants can avail CENVAT credit on the input services availed and the same shall be utilized only to the extent such credit is available on the last day of the month or quarter as the case may be for payment of duty or tax relating to that month or the quarter as the case may be. He submits, moreover, that the demand is raised on third-party information and therefore, cannot be sustained. He relies on the following:
- Sapanda Spoorthy Financial Ltd. – 2016 (06) LCX 0169.
- J.R. Herbal Care India Ltd. – 2010 (03) LCX 0058.
- M/s Origin Learning Solutions Pvt. Ltd. – 2021-TIOL-417-CESTAT-MADRAS.
- Balaji Machinery – 2022-TIOL-778-CESTAT-KOLKATTA.
3. Learned Counsel further submits that the demands pertain to the period 2014 to 2017 and the show-cause notice was issued on 31.11.2019; there is no suppression of material facts on the part of the appellants; therefore, the demand is time barred. He relies on the following cases:
- Chemphar Drugs & Liniments – 1989 (40) ELT 276 (SC).
- Padmini Products – 1989 (43) ELT 195 (SC).
- Pushpam Pharmaceuticals Company – 1995 (78) ELT 401 (SC).
- Uniworth Textiles Ltd. – 2013-TIOL-13-SC-CUS.
- Continental Foundation Jt. Venture – TIOL-1312-CESTAT-MUM.
4. Shri Ravinder Jangu, learned Authorized Representative for the Department, reiterates the findings of the impugned order and submits that the ST-3 Returns submitted by the appellants for the period April to September 2014, CENVAT credit was not shown under Heading D-1 whereas payment in cash was shown in D-1.
5. Heard both sides and perused the records of the case. The brief issue to be considered in this case is as to whether the appellant will not be eligible for CENVAT credit for the reason that the same was not mentioned in the ST-3 Returns filed and for the reason that credit has been taken after the prescribed period of six months or one year (from 01.03.2015). Learned Counsel for the appellants submits that the Department has not disputed the availment of input services and has not raised the issue of eligibility of the CENVAT credit. The only contention of the impugned order is that the credit is availed after the prescribed period. He submits that Tribunal has been holding consistently that CENVAT credit can be availed even if the registration is not taken; the case of the appellant is on a better footing.
6. I find that learned Commissioner finds that CENVAT credit on input and input services can only be availed within a period of six month or one year (w.e.f. 01.03.2015) from the date of invoice and in the instant case, time period of one year has already elapsed and moreover, the appellants have not claimed the CENVAT credit in the ST-3 Returns. I find that the Tribunal in the case of Origin Learning Solutions Pvt. Ltd. (supra) held that CENVAT credit cannot be denied for the reason that such availment was not reflected in ST-3 Returns. I also find that Tribunal and High Courts have been consistently holding that a substantial rate of eligibility to CENVAT credit cannot be denied on the basis of procedural violations. In the instant case, it is not disputed that the appellants have availed the services; paid the service tax on the same and are in possession of documents indicating such availment. Under the circumstances, I am of the considered opinion that credit cannot be denied only because it has been utilized late. Moreover, I find that the show-cause notice has been issued on the basis of third-party information. I find that though extended period has been invoked, no evidence of suppression, mis-statement, fraud, collusion etc., has been put forth. In the absence of the same, extended period cannot be invoked. I find that the Tribunal in the case of Balaji Machinery (supra) held that where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression etc. to justify the invocation of extended period. Therefore, I find that the impugned order is not legally sustainable.
7. In view of the above, the appeal is allowed both on merits and limitation.
(Pronounced on 25/01/2024)
