By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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CENVAT credit cannot be disallowed on adhoc basis without verification. Payments made vide wrong accounting code cannot be demanded again as tax is already paid and moreover when the department regularised the subsequent payment under the wrong code.
Facts:
The Appellant is a bank registered under centralized registration under service tax and discharged all its liabilities from its head office i.e. centralised registered premises. The Appellant took the CENVAT credit based on invoices pertaining to the head office kept at the head office and that pertaining to branch office was kept at the respective branches. During the CERA audit, invoices on which CENVAT credit was availed were demanded and the Appellant offered the invoices available at the head office but on account of huge volume, no checking was done and the CENVAT credit was denied. Secondly, the Appellant paid the service tax liability under the wrong accounting code and therefore they was asked to pay the said service tax again. Relying on the case of Arcadia Shares & Stock Brokers Pvt. Ltd. vs. CCE, Goa 2013 TIOL 1044 CESTAT Mum, the Appellant pleaded bonafides regarding use of erroneous code. However, they informed that the department itself regularised such a subsequent irregular payment and on intimation by the department and produced the relevant documents as evidence.
Held:
CENVAT credit cannot be denied without verification only because the volume is huge. Joint effort be made to conduct verification and case is remanded for verification. The payment made under wrong accounting code cannot be demanded and remanded the case for verification of the Appellant’s case that the subsequent payment was regularised by the department.
