CESTAT Allahabad Bench sets aside extended limitation period, remands case for duplicate demand verification.
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Allahabad Bench has set aside the invocation of the extended period of limitation by the Commissioner of Central Excise & CGST, Noida, in a case concerning M/s HCL Technologies Ltd. The Tribunal held that the extended period under Section 73(1) of the Finance Act, 1994, cannot be invoked when the appellant has regularly filed returns and disclosed the credit taken without suppression of material facts.
HCL Technologies Ltd., a global IT services company, was contesting a demand of Rs. 23.50 crore for inadmissible Cenvat credit availed during April 2007 to September 2011. The Tribunal found merit in HCL's argument that the extended period of limitation was incorrectly applied, as there was no suppression of facts, and the credit was openly declared in returns and refund claims.
Additionally, the Tribunal examined the disallowance of Cenvat credit for services such as outdoor catering and gym equipment AMC, which fall under specific exclusions post-2011 amendments to the Cenvat Credit Rules, 2004. The Tribunal upheld the disallowance of credits for these services.
The Tribunal also addressed an issue raised by HCL regarding the duplicate demand of Cenvat credit amounting to Rs. 8.93 crore. Finding the original order lacked a detailed examination, the Tribunal remanded the matter back to the Original Authority for verification.
The penalty imposed under Section 78 of the Finance Act, 1994, was set aside, following the principle that penalties cannot be imposed when the extended period of limitation is not applicable.
Bottom Line:
Extended period of limitation under Section 73(1) of the Finance Act, 1994 cannot be invoked when appellants have regularly filed returns and disclosed the credit taken, and there is no suppression of material facts.
Statutory provision(s): Section 73(1) of the Finance Act, 1994; Rule 2(l) of the Cenvat Credit Rules, 2004; Section 78 of the Finance Act, 1994.
The ruling underscores the importance of transparent compliance and proper documentation in tax matters while highlighting judicial scrutiny over the application of extended limitation periods in tax recovery cases.
