The Hon’ble Bench of Chandigarh CESTAT vide its order dated 25.01.2024 in the matter of M/s Antares Services Pvt. Ltd. Vs. The Commissioner of Central Excise, Chandigarh in Service Tax Appeal No. 60306 of 2022 [SM], held that Cenvat Credit cannot be denied on the ground that it has not been claimed in the ST-3 returns and for delay in utilizing the same, when there is no dispute that the services have been actually availed. It was found that the Tribunal and High Courts have consistently held that a substantial rate of eligibility of CENVAT Credit cannot be denied on the basis of procedural violations.

Facts of the Case: –

• The Appellant got themselves registered under the category of ‘Manpower Recruitment/Supply Agency Service’ and “Commercial Training or Coaching Service”; however, during the impugned period i.e. 2014-15 to 2016-17, they provided only Manpower Recruitment/ Supply Agency Service.
• The A.G, Audit conducted an audit of the records of the appellants and noticed that the appellants have not filed ST-3 Returns for the period April 2014. On the basis of which, a show cause notice dated 13.11.2019 was issued to the Appellant relying on the data supplied by the Income Tax Department, alleging recovery of Service Tax of Rs. 6,72,669/- along with interest.
• It was the case of the petitioner that they had enough credit to pay the demanded Service Tax and have discharged the same, however, the Department was of the view that the Appellants have taken the credit on the invoices beyond the permissible period of one year and therefore, credit is not admissible.
• Thereafter, the demand raised in the said show cause notice was confirmed by the Original, and also upheld by the Appellate Authority.

Contentions of the Appellant: –

• It was submitted on the behalf of the appellant that the appellant has availed input services like Renting of Property, CA Services, Service from Monster.Com etc. and utilized the same for provision of output services. The Appellant after availing the benefit of cum-tax as provided under Section 67(2) has discharged the duty and in fact have paid service tax in excess by Rs. 6,781/-.
• It was not correct on the part of the Commissioner (Appeals) to deny the credit on the ground that it was taken beyond a period of six months. As in terms of Rule 3 & 4, the appellants can avail CENVAT credit on the input services availed and the same shall be utilized only to the extent such credit is available on the last day of the month or quarter as the case may be for payment of duty or tax relating to that month or the quarter as the case may be.
• Relying on the judgments of Sapanda Spoorthy Financial Ltd. – 2016 (06) LCX 0169; J.R. Herbal Care India Ltd. – 2010 (03) LCX 0058; M/s Origin Learning Solutions Pvt. Ltd. & Balaji Machinery, it was submitted that that the demand is raised on third-party information and therefore, cannot be sustained.
• It was further submitted that for the period 2014 to 2017, the show cause notice was issued on 31.11.2019.  Though, there is no suppression in the present matter and therefore, the demand is time-barred.  To support its contention, reliance was placed on the decisions of Chemphar Drugs & Liniments – 1989 (40) ELT 276 (SC); Padmini Products – 1989 (43) ELT 195 (SC); Uniworth Textiles Ltd.; Continental Foundation Jt. Venture.

On the behalf of the respondent, the findings of the impugned order were reiterated and in addition, it was submitted that ST-3 Returns filed by the appellants for the period April to September 2014, CENVAT credit was not shown under Heading D-1 whereas payment in cash was shown in D-1.

Held: –

• The Hon’ble Bench of CESTAT Chandigarh after considering the submissions made and facts of the case, found that the brief issue to be considered in the present case is as to whether the appellant will not be eligible to CENVAT credit for the reason that the same was not shown in the ST-3 returns and for the reason that credit has been taken after the prescribed period of six months or one year (from 01.03.2015).
• The Hon’ble Bench after considering the submission advanced on the behalf of the appellant that ‘the Department has not disputed the availment of input services and has not raised the issue of eligibility of the CENVAT credit. The only contention of the impugned order is that the credit is availed after the prescribed period. That the Tribunal has been holding consistently that CENVAT credit can be availed even if the registration is not taken; the case of the appellant is on a better footing’ found that the Ld. Commissioner held that ‘CENVAT credit on input and input services can only be availed within a period of six month or one year (w.e.f. 01.03.2015) from the date of invoice and in the instant case, time period of one year has already elapsed and moreover, the appellants have not claimed the CENVAT credit in the ST-3 Returns.’
• The Hon’ble CESTAT taking note of the findings of the Ld. Commissioner, found that that the Tribunal in the case of Origin Learning Solutions Pvt. Ltd. (supra) held that CENVAT credit cannot be denied for the reason that such availment was not reflected in ST-3 Returns. Further, the Tribunal and High Courts have been consistently holding that a substantial rate of eligibility to CENVAT credit cannot be denied on the basis of procedural violations.
• That in the present case, it is not in dispute that the appellant has availed the input services, paid the service tax and also is in the possession of documents indicating such availment. Therefore, it was held by the Hon’ble Bench that credit cannot be denied only because it has been utilized late.
• It was further found that the extended period has invoked, however, no evidence of suppression, fraud, collusion etc., has been put forth. In absence of the same, the extended period cannot be invoked.
• With respect to the show cause notice issued on the basis of third-party information, it was found by the Hon’ble Bench that the Tribunal in the matter of Balaji Machinery (supra) it cannot be alleged that there was suppression etc. to justify the invocation of extended period. Therefore, it was found that the impugned order is not legally sustainable.

The Hon’ble bench of CESTAT Chandigarh with the above observations and findings, allowed the appeal both on merits and limitation.