Uttaranchal Cable Network Vs Commissioner, Customs, Central Excise & Service Tax (CESTAT Delhi)
No Bar on Assessee for claiming Adjustment of Tax demand from Unutilised Cenvat Credit not been carried forward to GST regime: CESTAT
Adjustment of Tax demand from Unutilized Cenvat Credit not carried forward to GST regime can be claimed by Assessee without any Bar
In Uttaranchal Cable Network v. Commissioner, Customs, Central Excise & Service Tax [ Order No. 51902/2021 dated October 13, 2021] Hon’ble Customs Excise and Service Tax Appellate Tribunal (CESTAT) held that the adjustment of the tax demand from the unutilized cenvat credit lying as on June 30, 2017 can be carried forward to the GST regime by the Assessee.
Uttaranchal Cable Network (“the Appellant”) aggrieved by the order (“Impugned Order”) passed by the commissioner, disallowing the adjustment of demand for service tax for the period prior to June 30, 2017 out of the cenvat credit lying of Rs. 14,31,166 as of June 30, 2017, has preferred this appeal.
The Appellant submitted that as per the conditions under Section 140 of the Central Goods and Services Act, 2017 (“CGST Act”) the appellant is entitled to take, in his electronic cash ledger (“ECL”) the amount of cenvat credit relating to period ending June 30, 2017, to the GST regime.
Hon’ble CESTAT, Delhi held that as per Section 140(1) read with Section 142 of the CGST Act, the Appellant is entitled to claim adjustment of the tax demand from the unutilized cenvat credit, lying to the credit as on June 30, 2017, which has not been carried forward to the GST regime.
Observed that, the commissioner has committed mistake of law while passing the Impugned Order and accordingly is liable to be set aside and allowed the present appeal.
Directed that, the adjudicating Authority to grant adjustment of the unutilized amount of Rs.14,31,166/- against the demand payable by the assessee. Further directed that, the appellant shall be entitled to consequential benefits in accordance with law.
FULL TEXT OF THE CESTAT DELHI ORDER
The appellant is in appeal against disallowance of adjustment of demand of service tax, relating to the period prior to 30.06.2017, out of the cenvat credit lying to their credit as on 30.06.2017.
2. Brief facts of the case are that the appellant is in the business of ‘Cable Operator’ service. The appellant was registered under the Service Tax regime. However, they did not chose to carry forward or to migrate cenvat credit to the GST regime, being the closing balance as on 30.06.2017. Pursuant to carrying an examination of the data of the appellant on the ACES software, it appeared to Revenue that appellant have mis-declared their turnover and furnished incomplete information in their ST-3 returns, with intent to evade payment of service tax. It also appeared that though the appellant has taken credit, but some of the documents are not in their possession for support. Such facts came to the notice only in the course of enquiry and correspondence by the Department. Accordingly, appellant was required to show cause by notice dated 03.04.2018, as to why not the amount of service tax of Rs. 15,39,919/- be demanded being service tax short paid for the period 2014-15 to 2015-16 under the proviso to Section 73(1). Further, proposed to appropriate amount of Rs.4,42,007/-, which has been deposited. Further interest as well as penalty was proposed under Section 78. It was further proposed to disallow cenvat credit of Rs. 66,542/- as not supported by documents. Further, interest was proposed on cenvat credit of Rs.2,97,289/- from the date of taking credit to the date of issuance of cenvatable invoice. It was further proposed appropriation of Rs. 1,28,700/-, deposited towards interest.
3. In response to the show cause notice, the appellant filed reply dated 24.08.2018. They did not contest the demand of service tax as alleged to be short paid. They further agreed to the amount of gross receipt at Rs.96,29,000/-, as turnover less declared for the period 2015-16.. They thus agreed to the short payment of service tax of Rs.15,39,919/-. The appellant also pointed out the amount of tax and interest already deposited, as follows:-
