Non-mentioning of Service Tax separately in invoice

PJ/Case Law /2016-17/3291

Case-BOVIS LEND LEASE INDIA PVT. LTD. Versus COMMISSIONER OF S.T., BANGALORE

Citation-2016 (43) S.T.R. 253 (Tri. - Bang.)

Brief Facts-The appellant is engaged in providing consulting engineer services. In respect of two projects, they had availed the services of Architects and they took credit of service tax paid on the services received from two Architect firms during October, 2003. Proceedings were initiated on the ground that the Cenvat credit was taken wrongly. It was found that in both the invoices on the basis of which credit was taken, service tax amount had not been shown separately.

Appelants Contention-Nevertheless it is the submission of the appellant that on the basis of certificates issued by the service providers, service tax had been paid promptly at the appropriate time in accordance with law and the returns also have been filed with the department.

Respondents Contention-The credit has been denied only on the ground that according to Rule 5 of Cenvat Credit Rules as it existed, there was a requirement that service tax amount should be shown separately.

Reasoning Of Judgement-Even though several arguments were advanced as to the eligibility of the appellant on the ground that the amount was treated as cum-tax amount by both the service receiver and service provider and tax had been promptly paid by both the service providers, yet, in view of the requirement in Rule 5(1) of Cenvat Credit Rules, which says that tax amount paid has to be indicated, the tribunal cannot go against the provisions of Rule and therefore, they do not consider it worthwhile to discuss all the submissions made with regard to this issue.
However, the submissions made by the learned counsel regarding limitation and non-applicability of extended period for denying the Cenvat credit on the ground that it was wrongly availed, in tribunal’s opinion is sustainable. In both the cases, the appellant had paid the amount and subsequently they have produced certificates from the service providers that they had paid tax promptly. In the case of one service provider, the final invoice copy was also produced which showed service tax amount paid separately and this amount is more than Rs. 74,000/-. Finally the show cause notice was issued on 7th June, 2004. This would show that the claim of the appellant that both the service provider and the service receiver believed that the amount originally invoiced was cum-tax amount and in one case, the final invoice was also issued confirming the bona fide belief on behalf of both the service receiver and the service provider. In such a situation, when the appellant had taken reasonable steps to ensure that the service providers had paid the tax which has been proved by subsequent certificates issued and also had followed the provisions relating to the steps to be taken by them to ensure that the tax has been paid, it cannot be said that there was intention to evade service tax or suppress the fact of availment of Cenvat credit based on invoices which did not show service tax separately. Under such circumstances, invocation of extended period to demand the amount of credit taken, in tribunal’s opinion, cannot be sustained. Accordingly, on the ground of limitation, appeal filed by the appellant is allowed with consequential relief if any to the appellant.

Decision-Appeal allowed

Comment-As per Rule 5(1) of Cenvat Credit Rules, 2004 which stipulates that tax amount is required to be indicated separately on invoice but since the assessee does not comply with provisions of Rule credit is deniable on the basis of merit considerations.
And as the assessee have produced certificates from the service providers that they had paid tax promptly and one invoice showing Service Tax separately therein, also produced. This shows that reasonable steps have been taken by assesseeto ensure that the service providers had paid the tax. Therefore it cannot be said that there was intention to evade service tax or suppress the fact of availment of Cenvat credit based on invoices which did not show service tax separately. Under such circumstances, invocation of extended period to demand the amount of credit taken, in tribunal’s opinion, cannot be sustained. Accordingly, on the ground of limitation, appeal is allowed.

Prepared By-Neelam Jain

Comments

PJ/Case Law /2016-17/3291

Post a Comment

Query