Whether service tax credit on strength of supplementary invoices admissible even prior to 1.4.2011?

PJ/Case Law/2014-15/2399

Case:- M/s HINDUSTAN COCA-COLA BEVERAGES PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR

Citation:- 2014-TIOL-623-CESTAT-DEL

Brief facts:- The dispute in the present appeal relates to availment of Cenvat credit of service tax of Rs. 10,74,468/- on the basis of invoices issued by the service provider. It is seen that the appellant availed the services of man power supply from one Mr. X, during the period 2005-2006 to 2008-2009. However, the said service provider did not deposit his service tax liability and a case was made out against him. Demands were confirmed against service provider who paid the same by way of invoices raised on 15.5.09. The present appellant i.e. service recipient took the credit of the said service tax paid by the service provider on 21.5.09.

Appellant’s contentions:-It was the contention of the appellant that inasmuch as the period in the present case is prior to 1.4.11, the fact of payment of service tax by the service provider on account of suppression etc, will not debar him from availing the Cenvat credit of the same.

Respondent’s contentions:-Proceedings were initiated against the appellant on the ground that inasmuch the service tax payment by the service provider was as a result of adjudication attributing willful suppression to the service provider, the present appellant cannot avail the Cenvat credit of service tax paid by him. For the above proposition, the lower authorities relied upon the amendments made in the provisions of Rule 9(1)(b) of Cenvat Credit Rules, 2004 with effect from 1.4.2011.

Reasoning of judgment:- It is seen that the period involved in the present appeal is from 2005 to 2008 and these supplementary invoices stand issued 24.03.2009. The Tribunal in the case of Delphi Automotive Systems (P) Ltd. Vs. CCE, Noida = 2013-TIOL-1793 CESTAT-DELhas observed that during the relevant period, Rule 9(1)(b) of CENVAT Credit Rules, 2004 was not applicable as regards the non-payment of service tax due to deliberate suppression and the subsequent issuance of supplementary invoices. The said provision was introduced in respect of service tax only with effect from 01.04.2011 by inserting clause (bb) in Rule 9(1). In as much as the period in the present appeal is before 01.04.2011, the tribunal dispensed with the condition of pre-deposit of duties.

It was also found that appellant instead of availing the credit after the payment of service tax paid by service provider, availed the same even before the payment of same by the service provider. The said availment was on the ground that appellant had paid the service tax to service provider for further depositing the same with the department. For such advance availment of service tax credit, the appellant has already paid the interest on the same.

In view of the above, the condition of pre-deposit of duty and penalty was dispensed with and the stay petition was allowed unconditionally.

Decision:- The stay petition allowed.

Comment:- The analogy of case is that Rule 9(1)(bb) debarring availment of credit on the strength of supplementary invoices if service tax was not paid by the service provider on account of suppression etc. is applicable from 1.4.2011. As the period involved in the present appeal was prior to 1.4.2011, the stay application was allowed unconditionally.

Prepared by:- Monika Tak

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PJ/Case Law/2014-15/2399

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