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April 2013

CENVAT credit availed and utilised on exempted services in excess of prescribed limit – No disclosure made in returns filed – Held, it is a wilful suppression of facts for which extended period can be invoked and hence liable for penalties u/s. 76 and 78 of the Act.

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 2 mins
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Facts:

Appellant was engaged in providing cellular telephone services in Jaipur circle. It was registered and paying service tax under “telephone services”. Appellant was consuming various input services and availing entire service tax credit as per Service Tax Credit Rules, 2002. Appellant was also receiving roaming charges from other telephone operators and was not paying service tax on the same during the period May, 2003 to August, 2004.

SCN was issued proposing to recover the service tax on the ground that Appellant should have restricted the utilisation of CENVAT towards payment of service tax on output service in terms of Rule 3(3)/3(5).

Tribunal upheld the demand of tax and also confirmed the invocation of extended period of limitation and upheld the penalties levied u/s. 76 and 78. Appellant contested the invocation of extended period of limitation stating absence of deliberate suppression.

Held:

When CENVAT credit was availed in excess of prescribed limits, facts ought to have been disclosed clearly by Appellant which is a professionally managed corporate. Failure to make the disclosures in returns or submitting entire facts by any letter accompanying the returns appears to be a case of wilful suppression. Extended period of limitation was rightly invoked. No substantial question of law is involved in the appeal and hence dismissed.

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