Custom, Excise & Service Tax Tribunal
Super Auto Forge Pvt Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 9 October, 2018
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.: E/40758/2018
(Arising out of Order-in-Appeal No. 27/2018 (CTA-II) dated
31.01.2018 passed by the Commissioner of Central Tax (Appeals-II),
Chennai)
M/s. Super Auto Forge Pvt. Ltd. : Appellant
Vs.
The Commissioner of G.S.T. & Central Excise, : Respondent
Chennai Outer Commissionerate Appearance:-
Ms. K. Nancy, Advocate for the Appellant Shri. R. Subramaniyan, AC (AR) for the Respondent CORAM:
Hon'ble Shri P Dinesha, Member (Judicial) Date of Hearing/Decision:29.08.2018 Date of Pronouncement: 09.10.2018 Final Order No. 42607 / 2018 This appeal is filed by the assessee against the Order-in- Appeal No. 27/2018 dated 31.01.2018 passed by the Commissioner of G.S.T. & Central Excise (Appeals-II), Chennai. The only point of dispute raised by the appellant is, whether the invoice raised by the service recipients under reverse charge mechanism, against which, the assessee had availed CENVAT Credit on input service, was 2 within the time limit stipulated under the CENVAT Credit Rules, 2004 or not.
1.2 A Show Cause Notice dated 19.02.2016 was issued alleging inter alia that the appellant having made a provision for the payment of commission to its directors for the period 2013-14, service tax ought to have been paid on or before 31.03.2014; that the commission to the appellant's directors were paid on 29.11.2014 and the service tax paid on 05.12.2014; that the input service distributor had distributed input service tax credit proportionately; that there was violation of the conditions envisaged in the third proviso to Rule 4 (1) of the CENVAT Credit Rules, 2004 and that therefore for the above reasons, it appeared that the ineligible service tax credit was taken by the appellant for the reason of the same having been taken after six months from the date of provision of service (on 31.03.2014) which was contrary to Notification No. 21/2014-CE (NT) dated 11.07.2014.
1.3 The appellant filed a detailed reply contending inter alia that the Directors were paid the commission on 29.11.2014; that the commission was for a continuous service which are not based on individual transactions; that they continued to be the Directors and thereby, the commission was provided continuously; the point of 3 taxation was to be decided by applying the first proviso to Rule 3 of Point of Taxation Rules when the commission having been paid on 29.11.2014 was relevant to determine the point of taxation; that the input tax credit was distributed based on the invoice raised on 28.02.2015 which was well within the period stipulated under rule 4 of the CENVAT Credit Rules, 2004; etc., and thus, requested for dropping of the proposed proceedings.
1.4 The adjudicating authority vide Order-in-Original No. 44/2017 dated 31.03.2017 accepted the plea of the appellant by observing inter alia that the Point of Taxation Rules, 2011 related to the determination of time for levy of service tax whereas the issue involved was whether the credit availed was beyond the time limit specified in the CENVAT Credit Rules and that the assessee had fulfilled Rule 4A of the Service Tax Rules, 1994 and therefore, the assessee had not contravened any of the provisions of CENVAT Credit Rules. The appeal was filed before the lower Appellate authority by the Revenue against the above dropping of proceedings by the adjudicating authority and the first appellate authority after considering the prayer of the Revenue and also the explanation of the assessee, allowed the appeal by holding inter alia that since no invoice was raised for the services as per Rule 3A of 4 the Service Tax Rules, 1994, service tax should have been paid on the date of completion of provision of service i.e., 31.03.2014, the service tax having been paid on 16.10.2014 and 29.11.2014 for which the service tax credit was availed by the appellant in February, 2015;
that invoices should have been issued as prescribed under Rule 4A of the Service Tax Rules, 1994, but the same having been raised in February, 2015, was well beyond the prescribed period under Rule 4A of the Service Tax Rules, 1994; etc. For the above reasons, the first appellate authority set aside the Order-in-Original and confirmed the demand, interest and equal penalty proposed in the Show Cause Notice dated 19.02.2016. The assessee has therefore filed this appeal feeling aggrieved by the above Order of the Commissioner (Appeals).
2. When the matter came up for hearing Ms. K. Nancy, Ld. Advocate appeared for the appellant and Shri. R. Subramaniyan, Ld. AC (AR) appeared for the Revenue.
3. I have heard the rival contentions, perused the documents placed on record and have also gone through the facts. 4.1 Admittedly, in this case the CENVAT Credit availed of Rs. 15,86,158/- has been distributed on pro rata basis by the Input Service Distributor (ISD) to the appellant which has been availed by the 5 assessee-appellant as input service tax credit during February, 2015 under Rule 4A, the conditions of which according to the adjudicating authority have been fulfilled by the appellant. The adjudicating authority relied on Notification No. 21/2014-CE (NT) dated 11.07.2014 in the Show Cause Notice, but however without referring to the same has held that the CENVAT Credit claimed was in order in the Order-in-Original. Admittedly, Notification No. 21/2014 refers to a period of six months within which the CENVAT Credit is required to be claimed and availed and for this, the date of issue of invoice assumes relevance.
4.2 Further, I find that the reasoning given by the first appellate authority namely, that the invoices have been raised beyond the time provided under Rule 4A of the Service Tax Rules is without any justification. As pointed out by the adjudicating authority, the issue relates to the availment of CENVAT Credit beyond the time limit specified in CENVAT Credit Rules and this has been clarified by the Board vide Notification No. 21/2014. Further, there is no dispute that the CENVAT Credit has been availed here in this case in February, 2015 which is within six months period and thereby, satisfying with the CBEC Notification No. 21/2014 (supra). For this 6 reason, the impugned Order of the Commissioner (Appeals) is unsustainable and liable to be set aside which I hereby do.
5. The Order of the adjudicating authority is restored.
(Pronounced in open court on 09.10.2018) (P Dinesha) Member (Judicial) Sdd