Hindustan Construction Company Ltd. Vs Commissioner of CGST (CESTAT Mumbai)
The dispute before the CESTAT Mumbai concerned recovery of ₹11,05,642/- of CENVAT credit, along with equal penalty, under Section 73(1) of the Finance Act, 1994 read with Rule 15(3) of the CENVAT Credit Rules, 2004. The Appellant, engaged in services such as works contract, renting of immovable property, supply of tangible goods, construction and manpower supply, had availed CENVAT credit on services including rent-a-cab, car repair, health insurance, outdoor catering and insurance for the Jammu high-risk area. During EA-2000 audit for 2013-14 to June 2017, the Department found such credits inadmissible.
The Appellant accepted the objection and reversed the amount through the GST portal on 21.08.2019. It was argued that the audit itself had recorded that the Appellant maintained more than ₹2 crore balance in its CENVAT account during the relevant period, showing that the disputed credit was never utilised. Despite reversal of credit, a show-cause notice dated 28.10.2019 was issued demanding recovery and equal penalty by invoking the extended period.
The Tribunal observed that Section 73(3) of the Finance Act, 1994 provides that where an assessee pays tax liability on being pointed out by the Department and informs the Department, no notice under Section 73(1), including invocation of extended period, should be issued. It further held that Rule 14 and Rule 15(3) of the CENVAT Credit Rules apply Section 73 mutatis mutandis, thereby extending the benefit of Section 73(3).
