2011 (6) TMI 595 - AT - Service Tax

ISD (input service distributor) - Suppression or mis-statement - Show Cause Notice was issued to the appellant on the sole allegation that the invoices are in the name of head office who was not registered as ISD and as such availment of credit on the basis of the same was not justified Held that - Show Cause Notice stands issued beyond the normal period of limitation law does not require them to disclose the above facts failure to disclose the same by itself cannot be equated with any suppression or mis-statement appeal is allowed

Summary

Issues:
Availment of CENVAT Credit on input services based on invoices in the name of head office, denial of credit, procedural defects, limitation period for Show Cause Notice.

Analysis:
The appellant, engaged in manufacturing excisable goods, faced a dispute regarding the availment of CENVAT Credit of Service Tax paid on input services totaling Rs. 5,43,200. The Show Cause Notice alleged that the appellant availed credit based on invoices from the service provider in the name of their head office, not registered as an input service distributor, which was deemed unjustified.

The original adjudicating authority confirmed the demand and imposed a penalty, a decision upheld by the Commissioner (Appeals), leading to the present appeal challenging the order on merit and limitation. The appellant argued that denial of credit solely due to invoices being in the name of the head office was unjust, citing precedents where such procedural defects were considered curable.

The Commissioner (Appeals) noted that procedures are essential to prevent misuse of government benefits and questioned the utilization of credit by the appellant for dutiable products or services. The invocation of a longer period was justified based on the appellant's alleged suppression of vital information in their ER-1 returns.

Upon review, it was found that the denial of credit based solely on invoices being in the name of the head office was unjustified. The Tribunal's decisions supported the eligibility of such invoices for credit purposes, considering the defects as curable and condonable. The Commissioner (Appeals) exceeded the scope of the Show Cause Notice by making assumptions.

The demand was deemed barred by limitation as the Show Cause Notice was issued beyond the normal period, and the appellant was not required to disclose specific invoice details in their returns. The failure to disclose such information could not be equated with suppression or misstatement to evade duty.

Consequently, the appeal was allowed on merit and limitation, with the demand held to be barred by limitation. The judgment was pronounced on 15-6-2011.