Global Logic India Limited Vs Commissioner of Central Goods & Service Tax (CESTAT Allahabad)
Held that option is available to the appellant to claim cenvat credit on service tax paid on input services received in its SEZ units instead of claiming benefit of exemption notification.
Facts- The appellant had availed and utilised the CENVAT credit of service tax paid on input services received in its Special Economic Zone. The appellant could also have claimed exemption by way of refund of the said service tax by virtue of Notifications dated 01.03.2011 and 20.06.2012, but it opted to take CENVAT credit of the same amount instead. The Additional Commissioner and the Commissioner (Appeals) have justified the disallowance of the CENVAT credit taken by the appellant on the sole ground that this benefit was not available before the issuance of the Notification dated 01.07.2013.
The Order has confirmed the demand of Rs. 7,59,918/- of service tax with interest and penalty upon the appellant on the ground that the appellant had recovered expenses incurred on rent-a-cab services from its customers, but had not paid service tax on a reverse-charge mechanism on these services. It was explained by the appellant in its reply dated 12.12.2014 that there was actually no recovery of expenses from the customers and that the amount of Rs. 1,72,70,301/- indicated in the chart was only a re-classification of expenditure in the books of account of the appellant.
Conclusion- In the present case, the appellant is not claiming the benefit of the Exemption Notification, but is claiming CENVAT credit on the service tax paid on input service received by the appellant. In this view of the matter, the finding recorded by the Commissioner (Appeals) disallowing CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that the SEZ Unit could only have opted for exemption by way of refund of such service tax cannot be sustained.
It is, therefore, clear that additional demand of service tax is claimed on the amount on which service tax has already been paid by the appellant. This demand has been computed by wrongly interpreting an internal ledger item. The Commissioner (Appeals) failed to appreciate this factual position. The demand made under this head, therefore, cannot be sustained.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
Global Logic India Ltd.1 has filed this appeal to assail the order dated March 28, 2018 passed by the Commissioner (Appeals), Noida, by which the order dated March 14, 2017 passed by the Additional Commissioner has been upheld. The Additional Commissioner had disallowed CENVAT credit and ordered it to be recovered with interest and penalty. The Additional Commissioner also confirmed the demand made for service tax with interest and penalty. The order passed by the Additional Commissioner is reproduced below:
“1. (a) The Cenvat Credit amounting to Rs.66,36,774/-taken in the month of October’ 13 for the period 2011 to June’ 2013 is disallowed and ordered to be recovered under Rule 14 of Cenvat Credit Rules’ 2004 read with proviso to Section 73(1) of the Finance Act, 1994.
(a) The Interest involved on the aforesaid amount should also be recovered from the party under rule 14 of CENVAT Credit Rules, 2004 read with provisions to Section-75 of Finance Act 1994.
(b) The Penalty of Rs.66,36,774/- under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section-78 of the Finance Act, 1994 is imposed upon the party for fraudulent availment of cenvat credit.
2. (a) The demand of Service Tax amounting to Rs.7,59,918/- is hereby confirmed under proviso to Section 73(1) of the Finance Act,1994. The party is directed to pay it forthwith.
(b) The Interest involved on the aforesaid amount should also be recovered from the party under the provisions of Section-75 of Finance Act 1994.
(c) The Penalty of Rs.7,59,918/- is also imposed upon the party under Section-78 of the Finance Act, 1994.
3. (a) The demand of Service Tax amounting to Rs.75,555/- is hereby confirmed under proviso to Section-73 of the Finance Act,1994. As Service Tax of Rs.75,555/- already stands deposited vide Challan no.1024,1313 & 1327 all dated 25.07.2014, the same is appropriated.
(b) The Interest amounting to Rs.7774/- involved on the aforesaid amount already stands deposited vide Challan no.1024, 1313 & 1327 all dated 25.07.2014, the same is appropriated.
(c) Penalty of Rs.75,555/- is also imposed on the party under Section 78 of the Finance Act, 1994.
4. (a) The Cenvat Credit amounting to Rs.18,62,067/- is disallowed. As the party has already debited the Cenvat amount of Rs.18,62,067/- vide Journal Voucher No. GL ING112015/20184 dated 01.07.2014 the same is appropriated under Rule 14 of Cenvat Credit Rules, 2004 read with proviso to Section 73 of the Finance Act, 1994.
(b) The Interest involved on the aforesaid amount should also recovered from the party under Rule-14 of CENVAT Credit Rules, 2004 read with provisions to Section 75 of Finance Act 1994.
(c) The Penalty of Rs.18,62,067/- under Rule 15(3) of the CENVAT Credit Rules,2004 read with Section-73 of the Finance Act 1994 is imposed upon the party.
5. (a) The Cenvat Credit amounting to Rs.859239/-(Rs.708721/- + Rs.150518/-) is disallowed and ordered to be recovered under Rule 14 of Cenvat Credit Rules’2004 read with proviso to Section 73(1) of the Finance Act, 1994.
(b) The Interest involved on the aforesaid amount should also be recovered from the party under rule 14 of CENVAT Credit Rules, 2004 read with provisions to Section 75 of Finance Act, 1994.
(c) The Penalty of Rs.18,62,067/- under Rule 15(3) of the CENVAT Credit Rules, 2004 read with 1994. Section 78 of the Finance Act, 1994 is imposed upon the party.
The aforesaid amounts should be paid forthwith. The amounts already paid will be appropriated against the amounts adjudged as above. This Order is issued without prejudice to any other action that may be taken or proposed to be taken against the said persons or firms under the Finance Act, 1994, or any other law for the time being in force in the Republic of India.”
2. It would be seen that this appeal has been filed against five heads of demand confirmed by the Additional Commissioner and upheld by the Commissioner (Appeals). These heads are as follows :
