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2016 (6) TMI 622 - CESTAT HYDERABAD

2016 (6) TMI 622 - CESTAT HYDERABAD - 2016 (45) S.T.R. 265 (Tri. - Hyd.) - Banking and Financial Service - eligibility of cenvat credit before seeking registgration - bonafide belief that the activities were not subject to service tax - Extended period of limitation - Held that:- adjudicating authority himself has accepted that the appellants were advised by their statutory auditors that services rendered by them attract service tax and that they thereon obtained service tax registration on 08-0 .....

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otal ₹ 1,83,27,017/- was paid by them by GAR-7 Challan dated 17-09-2009. The department has demanded a slightly higher tax liability, for the same period, of ₹ 3,89,86,389/- along with interest thereon. - Cenvat Credit - appellant was entitled to avail Cenvat credit on documents evidencing receipt of eligible inputs, capital goods or input services , even before the date they obtained service tax registration. They can very well adjust part or whole of their service tax liability .....

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ee. - Appeal No. ST/118/2012 - Final Order No. A/30497/2016 - Dated:- 3-6-2016 - Ms. Sulekha Beevi, C.S. Member ( Judicial ) And Mr. Madhu Mohan Damodhar, Member ( Technical ) Shri B.Venugopal, Advocate for the Appellant Shri Prabhu Dass Puli, AR for the Respondent ORDER [ Order per: Madhu Mohan Damodhar ] 1. The facts of the case are that the appellants are engaged in the Micro Finance Business, they extend loans to people below poverty line and also facilitate insurance to their members who bo .....

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and imposition of penalties under various provisions. In the adjudication proceedings that followed, the proposals in the notice were confirmed, equal penalty under Section 76 of the Finance Act, 1994 as also penalties under Sections 77and 78 ibid imposed. An amount of ₹ 1,56,17,727/- deposited by the appellants before issue of the notice, was appropriated towards the service tax and interest demands. The adjudicating authority also held that the Cenvat credit cannot be availed by the appe .....

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nder bonafide belief that Micro Financing does not come under Banking and Financial Service . However after being advised by their statutory auditors, they obtained opinion from KPMG when only they learnt that income earned on Group Registration Fees, Insurance Facilitation Charges, Commission on Money remittances will attract service tax. Consequently, they made provision towards the said service tax liability for the period 2004-05 till 2008-09 in their books of accounts for the year 2008-09. .....

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show cause notice itself has been issued sans locus. The demand is also barred by limitation since there never was any suppression, mens rea or malafide intention on their part. There is no legal bar for availing the Cenvat credit based on credit documents prior to the date of obtaining service tax registration and the contrary decision of the adjudicating authority in this regard is misconceived and without legal basis. He finally submits that since the appellant has not separately collected se .....

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were prior to date of registration, the learned AR submitted that such availment of Cenvat credit is barred by the provisions of Rule 3(4) of the Cenvat Credit Rules, 2004, which permits utilization of credit only to the extent such credit is available on the last day of the month or quarter for which tax liability is being discharged. He also pointed out that if the appellants were unsure of their tax liability, nothing precluded them from approaching the department for clarification, which wa .....

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010, had worked out their service tax liability for the period December, 2004 to August, 2009 as being Rs.3,77,37,965/-, and had partly discharged the said liability by adjustment of ₹ 2,21,20,238/- from Cenvat credit and balance of ₹ 1,56,17,727 along with interest liability thereof ₹ 27,09,290/- total ₹ 1,83,27,017/- was paid by them by GAR-7 Challan dated 17-09-2009. The department has demanded a slightly higher tax liability, for the same period, of ₹ 3,89,86,38 .....

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o be flawed and bereft of legal support. The Cenvat Credit Rules do not injunct thus. We are of the considered opinion that if and when the department demands service tax liability for taxable services rendered during a particular period, a corresponding right shall accrue to the assessee in question entitling him to avail of Cenvat credit on cenvatable documents evidencing inputs or capital goods or input services received by such assessee during the same period, of course subject to the condit .....

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522(Tri-Chennai), the Hon ble Tribunal observed that I have considered submissions on both sides. I find force in the argument of respondent that as pointed out by Hon. Karnataka High Court there is nothing in CCR, 2004 to restrict taking of credit only for services received after the date of registration especially in a situation where provider of service is exporting the services and is not required to pay service tax. I note that Rule 4 of Service Tax Rules is applicable to a person who is li .....

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aving eligibility for credit is sought to be achieved by a laborious interpretation of Service Tax Rules, 1994 and Cenvat Credit Rules, 2004 by interpreting that a service provider has to get registered (as per Service Tax Rules, 1994) and only a service provider can take credit (as per Cenvat Credit Rules, 2004) and deducing that an unregistered service provider does not get eligibility for credit. This is not a very sound argument. By not getting registered a person does not cease to become a .....

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2016(41)STR 498(Ttri-Bang). ii) In the case of Amar Remedies Vs CCE, Surat, 2010(257) EALT 552(Tri-Ahmd) the Hon ble Tribunal observed that The appellant s claim is that the inputs are duty paid and the inputs have been received in the factory. However, this aspect has not been examined in this case since the Cenvat Credit has been disallowed on the threshold that the registration was obtained after they have taken the Cenvat Credit. Therefore, they cannot be denied the benefit without verifyin .....

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nd genuineness of the duty paid nature and receipt of the goods in factory. The penalty and various other ancillary matters are linked with the above aspect. If it is found that the duty paid character and receipt of the goods in doubt, the lower adjudicating authority may decide the penalty aspect. The appellants are directed to produce relevant documents before lower adjudicating authority. Needless to say that the appellant should be granted reasonable opportunity of hearing. The assessee s a .....

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he decision of the Tribunal in the case of J.R. Herbal Care India Limited v. CCE, Noida - 2010 (253) E.L.T. 321 (Tri.- Del.). In this case the appellant had received the capital goods while availing SSI exemption without taking registration. Cenvat credit was taken on the capital goods for the years 2003-04 and 2004-05 but taken in the year 2005-06. This was allowed by the Tribunal. The Tribunal took a view that there is no provision in the rules that credit was not available to unregistered man .....

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ed will be available to the assessee /manufacturer subject to the conditions that proper documents showing the payment of duty are available. In the case of SSI Units also, wherever SSI benefits have been denied, Cenvat credit has been allowed. Therefore, in this case also the action of the appellants in taking credit on 09-10-2009 has to be upheld. It can be seen from the above reproduced ratio of the Division Bench decision that the appellant is eligible to avail Cenvat credit of the service t .....

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n to indicate that as STP appellant is eligible for refund of unutilised credit. iv) In the case of mPortal India Wireless Solutions P.Ltd Vs CST, Bangalore, -2012(27)STR.134(Kar), the Hon ble High Court Karnataka observed that the assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of ₹ 4,36,985/- is accumulated Cenvat credit. T .....

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the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both the parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on th .....

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edit availed, subject to the relied upon invoices/ documents evidencing sufferance of tax/duty found to be otherwise eligible for such availment pe se for the purposes of Cenvat Credit Rules, 2004. 9. The appellant has contended that since they had discharged the entire service tax liability with interest on 17-08-2009, issue of a show cause notice is precluded in view of Section 73(3) of the Finance Act, 1994. In this regard we find that the very availment of Cenvat credit, out of which the maj .....

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e tax registration and were subsequently audited by the department , did the latter come in the know of the nature and scale of the taxable services provided by the former. There thus emerges a case of suppressio veri, of suppression of facts, and the department was well within the ambit of law to issue demand for the extended period of limitation provided in Section 73 ibid. We also note that the appellant had no objection or protest to pay up their entire tax liability for the period December, .....

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ri-Kol)]., the Tribunal observed that, when the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable . - This finding of the t .....

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