2025 (7) TMI 1263 - AT - Service Tax

CENVAT Credit - various invoices some of which were not signed though computer generated some were computer generated not signed and also of different address and the third category was in relation to signed invoices but having different address of the recipient - HELD THAT - The order of the Commissioner is well founded and based on reasoning adopted by various citations which are supplemented by the case law provided by Amicus Curiae in the matter. It is found that the decisions mentioned by the Learned AR are distinguishable in so far as there were reasonable doubts raised about the underlying transaction and substantive benefits itself in that matter. As against this the plethora of case law relied upon by the learned Commissioner as well as provided by the Amicus Curiae justifies the reasoning and the decision taken by the Commissioner. We therefore uphold the decision on the aspect of Cenvat Credit by the learned Commissioner. On the second issue which pertains to period April 2005 to March 2008 involving differential service tax raised over and above the amount agreed upon by the appellants. The same has been upheld without providing adequate reasons for working of the same by the department. The order therefore leaves much to be desired on this aspect of the demand - matter remanded back to the original authority to provide materials to the appellants to defend the case including working if any of this differential demand. While considering quantum of the working the original authority should also consider if the same is hit by limitation or not. Department s appeal rejected and party s appeal is allowed by way of remand.

Summary

ISSUES:

Whether Cenvat Credit can be disallowed solely on the basis of procedural lapses when the underlying transactions and their authenticity are not doubted by the department.Whether the demand of differential service tax for the period April 2005 to March 2008, raised over and above the amount agreed upon by the appellant, is sustainable without adequate reasons or material provided to the appellant.Whether the department's demand calculation complies with limitation provisions and procedural fairness in allowing the appellant to defend the case.

RULINGS / HOLDINGS:

On Cenvat Credit, the court held that "substantive benefit cannot be disallowed for only procedural lapses" and upheld the allowance of credit where the authenticity of transactions was not doubted by the department.Regarding the differential service tax demand, the court found that the impugned order "leaves much to be desired" due to lack of adequate reasons and remanded the matter for the original authority to provide materials and working details to the appellant.The court directed that the original authority should consider whether the differential demand is "hit by limitation or not" while reassessing the quantum of demand.

RATIONALE:

The court applied established legal principles from a series of precedents emphasizing that procedural irregularities alone do not justify denial of Cenvat Credit if the "underlying transactions and their authenticity is not doubted." Key precedents cited include Poornam Info Vision, CCE Vs A.B. Mauri India Pvt. Ltd, and others.The court distinguished the department's reliance on Steelco Gujarat Ltd., noting that in that case "reasonable doubts raised about the underlying transaction and substantive benefits itself" justified disallowance, unlike the present matter.On the differential service tax demand, the court underscored the necessity of procedural fairness, requiring the department to provide the appellant with "materials to defend the case including working if any of this differential demand," reflecting principles of natural justice and limitation law.No dissenting or concurring opinions were recorded; the decision reflects a reaffirmation of the principle that substantive transactions must be doubted to deny credit and that demand calculations must be transparent and supported by adequate reasons.