Oman Air SAOC Vs Commissioner of Service Tax (CESTAT Mumbai)
CESTAT Mumbai held that unreported cenvat credit doesn’t lapse merely the same is not shown in ST-3 return. Thus, denomination as anything other than procedural lapse in not reporting the existence of such credit, the impugned order cannot survive.
Facts- In this dispute of M/s Oman Air SAOC with order1 of Commissioner of Service Tax-I, Mumbai, the peculiar nuances and fundamental underpinning of tax credit – purpose in design, mode of utilization and jurisdiction to recover – are necessarily to be considered. The impugned order, invoking section 73(2) of Finance Act, 1994 in conjunction with rule 14 of CENVAT Credit Rules, 2004 to confirm demand of ₹ 3,93,21,581, along with applicable interest u/s. 75 of Finance Act, 1994, and imposing penalty of ₹ 3,93,21,581 under rule 15 of CENVAT Credit Rules, 2004, is challenged for those very detriments even though, and strangely so, there is no allegation that the impugned credit had been ineligibly taken under rule 3 of CENVAT Credit Rules, 2004 or inappropriately retained in breach of rule 6 of CENVAT Credit Rules, 2004 and nor that the impugned credit had been utilized for the payment of duty at any time under rule 3(4) of CENVAT Credit Rules, 2004 with consequence of confinement to accounting limbo – the only circumstances warranting proceedings for extinguishment with resuscitation only through jurisdictional sanction. It is all about the proposition of service tax authorities that existence of credit is contingent upon reporting; that, but for retention in returns, credit lapses.
