Extended Limitation Cannot Be Invoked When CENVAT Credit Disclosed In ST-3 Returns: CESTAT Allahabad Grants Relief To HCL
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the extended period of limitation cannot be invoked when the assessee has regularly disclosed CENVAT (Central Value Added Tax) credit in ST-3 returns and furnished complete details while filing refund claims under Rule 5 of the Cenvat Credit Rules, 2004. P. Dinesha (Judicial Member) and...
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the extended period of limitation cannot be invoked when the assessee has regularly disclosed CENVAT (Central Value Added Tax) credit in ST-3 returns and furnished complete details while filing refund claims under Rule 5 of the Cenvat Credit Rules, 2004.
P. Dinesha (Judicial Member) and Sanjiv Srivastava (Technical Member) stated that it is also evident from the format of the return date appellant was only required to declare the total credit taken during the period of return under various heads, without detailing credit taken against specific service or the invoices. Even otherwise, when these invoices, all the documents were submitted alongwith the refund claim under Rule 5, authorities should have worked out and made the demand rather than waiting for another three years.
In the case at hand, the assessee/appellant is a global IT services company engaged in the development of SOFTWARE & Exporting thereof through the internet from its centres at Bangalore, Chennai, Gurgaon and Hyderabad, etc., to various customers situated outside India.
As the assessee was mainly exporting ITS/ITE Service as per Export of Service Rules, 2005, they were not in a position to utilise Cenvat credit from its input services.
They had applied their first refund claim on 14.05.2009 under Rule 5 of Cenvat Credit Rules, 2004, read with Notification No.5/2006-CE (NT) dated 14th March, 2006, for the period from 16.05.2008 to 30.06.2008 along with documents as required for claiming a refund. For subsequent periods, they filed the refund claims at regular intervals.
The department found that the assessee had irregularly availed Cenvat credit of service tax paid on inadmissible services, i.e. Insurance Auxiliary Services, Advertising Services & Sponsorship Services, etc., which do not fall under the definition of input services.
A show cause notice was issued to the assessee confirming the demand of Rs. 31.05 crores, which was confirmed through the Adjudicating Authority.
The Tribunal noted that the assessee filed regular refund claims and provided all the documents.
The bench opined that when all the facts were being made known to the department in the form of the credit declared in ST-3 return and also in the form of the refund claims filed, there cannot be a valid ground for the invocation of the extended period of limitation.
The Tribunal stated that the assessee had been declaring the Cenvat credit taken erroneously to the department. They were regularly filing the returns as prescribed by the due date, declaring the credit taken.
The bench opined that the extended period of limitation could not have been invoked.
In view of the above, the Tribunal partly allowed the appeal.
Case Title: M/s HCL Technologies Ltd. v. Commissioner of Central Excise & CGST, Noida
Case Number: Service Tax Appeal No.70718 of 2021
Counsel for Appellant/ Assessee: Atul Gupta
Counsel for Respondent/ Department: Santosh Kumar