CESTAT Mumbai held that as registration numbers were purposefully omitted, accordingly, the genuineness of the invoices are doubtful, the invoices are categorized as inadmissible document.
Facts- Assessee-Appellant M/s. Navkar Corporation Ltd. has been providing Cargo Handling Services, Storage and Warehousing Services. On the basis of intelligence gathered, premises of the Assessee was searched on 11.05.2012, several documents were seized under Panchnama including invoices on which CENVAT Credit were taken, statements of the witness were recorded.
A show-cause cum-demand notice dated 10.10.2004 was issued to the Appellant to show cause as to why the CENVAT Credit should not be denied and recovered from them as inadmissible CENVAT Credit of Construction Service availed by them during the period from 2008-09 to 2010-11, under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance act, 1994 along with interest and penalty.
Conclusion- Held that the registration numbers were purposefully omitted from being reflected, in some of the invoices by deleting the same from the relevant place where as the same is found reflected in bill dated 12.06.2009. This aspect is not referred in the show-cause notice though the same show-cause notice was issued on the basis of investigation but the genuineness of the invoices are doubtful since placing the Service Tax registration number is conspicuous by its absence that would put the invoices in the category of inadmissible document.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Legality of the order passed by the Commissioner in partly allowing CENVAT Credits as admissible and partly denying a portion of credits as inadmissible is assailed in these two appeals by the Assessee as well as the Department to the extent of the order affecting them.
2. Facts of both the cases can be summarised as below:
Assessee-Appellant M/s. Navkar Corporation Ltd. has been providing Cargo Handling Services, Storage & Warehousing Services. On the basis of intelligence gathered, premises of the Assessee was searched on 11.05.2012, several documents were seized under Panchnama including invoices on which CENVAT Credits were taken, statements of the witness were recorded and it was noticed that Appellant had contravened the following provisions:
(a) Section 70 of Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994 as the noticee failed to file the service tax return for the period from October 2011 to March 2012 by the due date of 25th of April 2012 till the day of visit of the Preventive Officers on 11.05.2012;
(b) Rule 3(1) & Rule 3(4) of CENVAT Credit Rules, 2004, as they availed CENVAT Credit against Construction Service, which is not “input service” for them as the same is not used by them for providing their output service;
(c) of Rule 9(1)(f) of CENVAT Credit Rules, 2004, read with Rule 4A(1) of Service Tax Rules, 1994 as they availed CENVAT Credit of Service Tax, against invoices which do not bear Service Tax Registration Number of respective Service Provider;
(d) of Rule 9(1)(f) of CENVAT Credit Rules, 2004, read with Rule 4A(1) of Service Tax Rules, 1994, as they availed CENVAT Credit of Service Tax paid on Construction Service, against Invoices/Bills which were not available with them.
Accordingly, a show-cause cum-demand notice dated 10.10.2004 was issued to the Appellant to show cause as to why,
(i) The CENVAT Credit of Rs.2,03,72,506/- (Rupees Two Crore Three Lakh Seventy Two Thousand Five Hundred Six only) should not be denied and recovered from them as inadmissible CENVAT Credit of Construction Service availed by them during the period from 2008-09 to 2010-11, under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance act, 1994;
(ii) Interest at the appropriate rate should not be recovered from them under the Provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994, against the inadmissible CENVAT Credit availed by them;
(iii) Penalty should not be imposed on them in terms of Rule 15(4) for period upto 27.02.2010 & under Rule 15(3) for the period from 27.02.2010 onwards, of Cenvat Credit Rules, 2004 read with Section 78 of the Finance act, 1994;
(iv) Amount should not be recovered from them under the provisions of Rule 7C of the Service Tax Rules, 1994;
(v) Penalty should not be imposed on them under the provisions of Section 77 of the Finance Act 1994;
Additionally (vi) Shri Nemichand Jayavantraj Mehta, Managing Director of the noticee company and Shri Anish S. Maheshwari, General Manager, (Finance) was required to show cause as to why penalty should not be imposed upon him under the provisions of Section 78A of Finance Act, 1994, as amended.
Assessee replied back. The matter was adjudicated upon by the Commissioner of CGST & Central Excise, Raigad who passed his order on dated 15.03.2018, the operating portion of which reads:
“ (i) I disallow Cenvat Credit of Rs. 1,04,20,879/- (Rupees One Crore Four Lakhs Twenty Thousand Eight Hundred Seventy Nine only) (Rs.84,51,419/- + Rs.19,69,460/-) and determine the same as payable by M/s. Navkar Corporation Ltd. under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(2) of the Finance Act, 1994;
(ii) I drop the demand of Rs.99,51,627/- (Rupees Ninety Nine Lakhs Fifty One Thousand Six Hundred Twenty Seven only).
(iii) I order recovery of interest at appropriate rate on the Cenvat Credit disallowed as proposed above, from the date when irregular Cenvat Credit was taken till the date of reversal of said amount, under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994;
(iv) I impose penalty of Rs.1,04,20,879/-(Rupees One Crore Four Lakhs Twenty Thousand Eight Hundred Seventy Nine only) on M/s. Navkar Corporation Ltd, under the provisions of Rule 15(3) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994;
(v) I impose penalty of Rs.10,000/- (Rupees Ten Thousand Only) on M/s. Navkar Corporation Ltd, under the provisions of Section 77 of the Finance Act, 1994;”
Assailing legality of the said order, the Revenue-Department through the concerned the Commissioner, Navi Mumbai filed appeal No. ST/88329/2018 against dropping of demand of Rs.99,51,627/- by the Commissioner and permitting availment of input services taken on construction services while the Assessee-Appellant has filed appeal No. ST/88324/2018 against denial of CENVAT Credit of Rs.1,04,20,879/- as inadmissible credits with direction for its recovery alongwith interest, equal penalty and penalty of Rs.10,000/- imposed under provision of Section 77 of the Finance Act, 1994.
3. During course of hearing of the appeal learned Counsel for the Assessee-Appellant Mr. Bharat Raichandani, in placing reliance on the decision of this Tribunal made in the case of Mafatlal Industries Ltd. Vs. Commissioner of Central Excise & Service Tax, Ahmedabad reported in 2020 (43) GSTL 562 (Tri.-Ahmd.) submitted that the primary ground taken by the Commissioner to refuse CENVAT Credits was that in some of the invoices Service Tax registration numbers were not available and some of the invoices were missing but the above referred judgments would clearly reveal that the same was technical infraction and the some omission was not done by the Assessee-Appellant but by the service provider who issued the invoices, which could have been cross verified by the Department from the service provider regarding actual payment of Service Tax so as to extent the admissibility of those credits to the Assessee- Appellant. He further pointed out that as could be noticed in Annexure B of the show-cause notice, denial of CENVAT Credit to the tune of Rs.19,69,460/- on the ground that the invoices were missing was incorrect for the reason that invoices were all along in possession of the Assessee-Appellant which they have annexed to the written submission during the hearing of this appeal. Further, he pointed out that show-cause notice was issued on 10.01.2014, which was beyond the period of limitation of 18 months period prescribed during the relevant time and placing reliance on the judgments of Uniworth Textiles Ltd. V/s. CCE Raipur reported in 2013 (288) ELT 161 (SC), Hi Tech Power & Steel Ltd. V/s. CCE Raipur reported in 2014 (34) STR 276 (Tri. -Del), Apex Electricals Pvt. Ltd. V/s. Union of India reported in 1992 (61) ELT 413 (Guj HC), M/s UPS Jetair Express Pvt. Ltd. vide Final Order No. A/87664/2018 dated 18.10.2018, he further submitted that the grounds available under Section 73 for invocation of extended period like wilful suppression with intent to avail inadmissible credits could not be conclusively established by the Revenue, for which the order passed by the Commissioner to the extent of inadmissibility of credits and penalties, interest etc. are liable to be set aside.
4. In response to the appeal filed by the Revenue wherein the admissibility of inputs credit in respect of Construction, Architect, Chartered Engineer, Interior Decorator services were held in favour of the Assessee-Appellant service provider dealing with Cargo Handling, Storage and Warehousing services which were proposed to be denied in the show-cause notice on the ground that during the relevant period construction service, in view of the Board Circular No. 98/1/2008-ST dated 04.01.2008, was been treated as work undertaken for creation of immovable property and as the resultant output on the same is not a service inputs meant for service in terms of Rule 2(l)(i) of the CENVAT Credit Rules, 2004 is not admissible but the same is a misplaced proposition for which placing reliance on the judgment on the Hon’ble Bombay High Court passed in the case of Coca Cola India Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-III reported in 2009 (15) STR 657 in which Section 2(l) was elaborated and explained, learned Commissioner had correctly set aside the demand. He had drawn our attention to the ratio of the judgment passed in the case of CCE, Visakhapatnam-II Vs. Sai Samhita Storages (P) Ltd. reported in 2011 (270) ELT 33, wherein Hon’ble Andhra Pradesh High Court had clearly held that without use of cement & TMT bars etc., storage and warehouse services could not be provided for which credits are admissible in respect of those raw material like cement & TMT bars. Further, in Mundra Port And Special Economic Zone Ltd. Vs. CCE (CESTAT) reported in 2015-TIOL-1288-HC-AHM-CX also credits were held to be admissible on the input services received for Warehousing and Port services. He further referred to the judgments of the Hon’ble Madras High Court passed in the case of Commissioner of GST & Central Excise, Chennai-40 Vs. M/s. Dymos India Automotive Pvt. Ltd. reported in 2018-TIOL-1947-HC-MAD-ST wherein judgment of the CESTAT in the case of Vamona Developers Pvt. Ltd. Vs. Commissioner of Customs, Central Excise & Service Tax, Pune-III reported in 2015-TIOL-2705 etc. was referred to justify the order passed by the Commissioner in allowing credits availed on construction service.
5. On the contrary learned Authorised Representative for the Respondent Mr. Prabhakar Sharma, in response to the argument led in the appeal filed by the Assessee-Appellant, submitted that no irregularity can be noticeable in the order passed by the Commissioner in refusing CENVAT Credit of Rs.84,51,419/- taken through improper/incomplete documents and CENVAT Credit of Rs.32,14,579/- on failure of the Appellant to produce duty paying documents for the reason that Rule 9 of CENVAT Credit Rules, 2004 has elaborately made provision concerning availability as well as examination of documents and more importantly it has placed the burden of proof regarding admissibility of CENVAT Credit upon the provider of output service, for which interference by the Tribunal in the order concerning denial of CENVAT Credits to the Appellant on improper documents is uncalled for. In support of the Departmental appeal, he contended that the position of law in respect of admissibility of CENVAT Credit on construction services has undergone change in the recent past otherwise during the relevant period the Board Circular was having prevalence and was being respected and that the judgments which are cited by the learned Counsel for the Assessee-Appellant herein were not placed before the Commissioner. He further submitted that there is clear noting also by the Commissioner in his order that Appellant was asked to supply copies of missing invoices but after submitting few of them, it had intimated the Commissioner in writing on 17.01.2018 that they did not wish to submit anything further, as could be noticed from para 20 page 10 of the Commissioner’s order.
6. We have carefully gone through the appeal memo, cross objection, written notes submitted by the Assessee in both the cases and the relied upon judgments. In view of the judgment of Sai Samhita Storages (P) Ltd., cited supra that has been consistently followed in Mundra Port And Special Economic Zone Ltd., Vamona Developers Pvt. Ltd. etc. and at various forums permitting availment of CENVAT Credit of the construction service for the specified purpose and relevant period, we find no merit in the Departmental appeal and confirm the findings of the Commissioner on this issue. Now coming to the inadmissibility of credits availed by the Assessee-Appellant, there were two types of rejection order viz. improper document and unavailable document. Assessee-Appellant has contended that only on certain documents the Service Tax registration numbers were not reflected which should have been treated as procedural infraction and on that ground alone, substantial right should not be denied. The other contention of the Appellant is that it is in possession of all the invoices which were shown as unavailable in the order passed by the Commissioner.
6.1 Going by the Commissioner’s order it is noticed that he has reproduced sub-Rule 2 of Rule 9 of CENVAT Credit Rules, 2004 in his order and also explained sub-Rule 5 as well as sub-Rule 6 of the said Rule to justify that such non-availability of Service Tax registration number of the person issuing the invoice cannot be treated as a technical irregularity but without expressing the same in verbatim. For better clarity we would like to reproduce para 19 of the order passed by the Commissioner:
“The next issue to be decided is availment of Cenvat Credit on invalid documents, i.e. Credit availed on the basis of documents on which the service tax registration number of the service provider is not mentioned. Rule 3 of Cenvat Credit Rules, 2004 enables the provider of output services to take Cenvat Credit of Service Tax paid and allow to utilize the Cenvat Credit so taken for payment of Service Tax on output services. Rule 4 prescribes conditions for allowing Cenvat Credit. Rule 9(1) of the Cenvat Credit Rules, 2004 prescribes the documents on the basis of which the CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be. Rule 9(2) reads as under:
“(2) No CENVAT credit under sub-rule(I) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document:
Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax Registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit;”
While sub-rule (5) of Rule 9 of CCR requires the provider of output service to maintain proper records of the receipt and consumption of the input and capital goods, sub-rule (6) of Rule 9 requires the provider of output service to maintain proper records of the receipt and consumption of the input service. It is pertinent to mention that these two sub-rules in no uncertain term state that the burden of proof regarding admissibility of the Cenvat Credit shall lie upon the provider of output service taking such credit.”
(Underlined to emphasise)
Going by the above provisions it can very well be said that the rule itself permits exclusion of certain particular but insists for inclusion of certain particulars including reflection of Service Tax registration number on the invoice to make the credit an eligible credit under the CENVAT Credit Rules, besides the fact that the burden of proof of admissibility of such CENVAT Credit always rest on the provider of output service taking such credits, as could be seen from sub-Rule 5 & 6 of Rule 9 of CENVAT Credit Rules, 2004. This being so, the very argument of Appellant that it is a technical infraction i.e. missing Service Tax registration is an error caused by the service provider would be of no help to the Appellant since the burden lies on it to establish the bonafideness of the duty paying document.
7. It would not be out of place to mention here that during course of hearing of these appeals, sample invoices attached to the appeal memo vis. a. vis. Annexure C of the show-cause notice are verified and it is noticed that invoice/bill dated 12.06.2009 of M/s. S.S. Patil & Sons annexed to the appeal memo at page 163 is having printed Service Tax registration number at its appropriate column, against which credits were also allowed while the same M/s. S.S. Patil & Sons’s invoices mentioned from Sr. No. 10 to 14 and Sr. No. 17 to 19 of Annexure 3 to the show-cause notice are stated to have not containing the Service Tax Registration number, though all were issued in May, October, November, 2010. Therefore, it is not the case of the Appellant that Service Tax registration was not taken at the time bill copies were printed but it appears that the registration numbers were purposefully omitted from being reflected, in some of the invoices by deleting the same from the relevant place where as the same is found reflected in bill dated 12.06.2009. This aspect is not referred in the show-cause notice though the same show-cause notice was issued on the basis of investigation but the genuineness of the invoices are doubtful since placing the Service Tax registration number is conspicuous by its absence that would put the invoices in the category of inadmissible document. We are, therefore, not inclined to interfere in the findings of the Commissioner on this issue.
8. On the issue of taking credit without supporting invoices Appellant might have procured/discovered those invoices subsequently and produced the same at the time of hearing of these appeals before this Tribunal but the same cannot be taken as additional piece of evidence in the absence of following procedure contained in Rule 23 of the CESTAT (Procedure) Rules, 1982, when manifestedly the Commissioner had made categorical observation with reference to Assessee-Appellant’s own reply letter that they had no other document available at their end for production. Hence the order.
8. Both the appeals are dismissed and the order passed by the Commissioner of CGST & Central Excise, Raigad vide Order-in-Original No. 33/NVK/COMMR/RGD/2017-18 dated 15.03.2018 is hereby confirmed.
(Order pronounced in the open court on 31.08.2023)