Extended Limitation Unsustainable Where CENVAT Credit Disclosed In ST-3 Returns; CESTAT Allahabad Partly Allows HCL Appeal
Pranav B Prem
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the extended period of limitation cannot be invoked where an assessee has regularly disclosed availment of CENVAT credit in its ST-3 returns and has furnished complete details while filing refund claims under Rule 5 of the Cenvat Credit Rules, 2004. Holding that there was no suppression of facts or intent to evade tax, the Tribunal partly allowed the appeal filed by HCL Technologies Ltd.
The Bench comprising P. Dinesha, Judicial Member, and Sanjiv Srivastava, Technical Member, observed that when all material facts are consistently disclosed to the Department through statutory returns and refund applications, invocation of the extended period of limitation is wholly unsustainable.
HCL Technologies Ltd, the appellant, is a global information technology services company engaged in the development of software and export of IT and IT-enabled services through its delivery centres located at Bengaluru, Chennai, Gurugram, Hyderabad and other locations. As the company was predominantly engaged in export of services in terms of the Export of Service Rules, 2005, it was unable to utilise the CENVAT credit accumulated on its input services.
Accordingly, the appellant filed its first refund claim on May 14, 2009 under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated March 14, 2006, for the period from May 16, 2008 to June 30, 2008. Thereafter, refund claims for subsequent periods were filed at regular intervals. Along with each refund claim, the appellant furnished the requisite documents, including invoices and details of input services on which CENVAT credit had been availed.
Subsequently, the Department took the view that the appellant had irregularly availed CENVAT credit on certain services such as insurance auxiliary services, advertising services and sponsorship services, which according to the Department did not qualify as “input services” under the Cenvat Credit Rules. On this basis, a show cause notice was issued proposing recovery of CENVAT credit amounting to ₹31.05 crore by invoking the extended period of limitation. The demand was confirmed by the adjudicating authority.
Before the Tribunal, the appellant contended that there was no suppression or misstatement of facts, as the entire CENVAT credit availed had been disclosed in the ST-3 returns filed regularly within the prescribed time. It was further submitted that all supporting documents, including invoices, had been submitted along with the refund claims under Rule 5, and therefore the Department was fully aware of the nature and quantum of credit availed. The appellant argued that in such circumstances, the extended period of limitation could not be invoked.
The Tribunal accepted these submissions. It noted that under the format of the ST-3 return applicable during the relevant period, the assessee was required only to declare the total credit taken during the return period under various heads, and not to provide invoice-wise or service-wise details. The Bench observed that even otherwise, the appellant had submitted all relevant invoices and documents along with the refund claims, which gave the Department complete visibility of the credit availed.
The Tribunal held that when all facts were made known to the Department through ST-3 returns as well as refund claims, there was no justification for invoking the extended period of limitation. It observed that the authorities, having access to all documents, ought to have examined the admissibility of credit at the relevant time instead of waiting for several years to issue a show cause notice.
The Bench further noted that the appellant had been regularly filing statutory returns and had disclosed the CENVAT credit taken, even where such credit was later alleged to be inadmissible. In the absence of any evidence of fraud, wilful misstatement or suppression of facts with intent to evade tax, the mandatory conditions for invoking the extended period of limitation were not satisfied. In view of these findings, the Tribunal held that the extended period of limitation could not have been invoked in the present case. Accordingly, the CESTAT partly allowed the appeal filed by HCL Technologies Ltd, granting relief on the issue of limitation and setting aside the demand to the extent it was hit by limitation.
Appearance
Counsel for Appellant/ Assessee: Atul Gupta
Counsel for Respondent/ Department: Santosh Kumar
Cause Title: M/s HCL Technologies Ltd. v. Commissioner of Central Excise & CGST, Noida
Case No: Service Tax Appeal No.70718 of 2021
Coram: P. Dinesha (Judicial Member) , Sanjiv Srivastava (Technical Member)
