Legality of Service Tax Credit can only be questioned to the ISD by Jurisdictional Authority: CESTAT

Service Tax Credit - ISD - Jurisdictional Authority - CESTAT - taxscan

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that legality of Service Tax Credit can only be questioned to the Input Service Distributor (ISD) by jurisdictional authority.

The issue involved herein is about the availment of Service Tax credit by the appellant, M/s. GP Petroleums Ltd against the invoices issued by ISD. As per case records since in separate proceedings for the period from March, 2013 to April, 2015 the Adjudicating Authority therein disallowed the Cenvat credit to the appellant under proviso to Section 11A of the Act.

According to Revenue in the instant proceedings for the period in issue i.e. May, 2016 to March, 2017 also the appellants have wrongly availed the service tax credit of Rupees three lakhs and accordingly a show cause notice was issued to the appellants for recovering the said amount along with interest and penalty which has been confirmed and upheld by the authorities below.

It is borne out from the case records, that the main reason for initiating the current proceedings against the appellant is the order in appellants own case for the earlier period i.e. March, 2013 to April, 2015 on the same issue.

The Chartered Accountant appearing for the appellant drew the attention towards appellant’s own case M/s. G.P. Petroleum Ltd. vs. CCE&ST, wherein it was held that “In view of above finding of the Tribunal, it is incumbent upon the ISD to prove the eligibility or otherwise the Service Tax credit, since at the receiver end no detail would be available regarding the nature of services.”

“Further in view of Swastik Tin Works judgment, a clear finding has emerged that Additional Commissioner (Audit) has no jurisdictional assessment and no power to issue show-cause notice to raise demand, that to invoking extended period of limitation.”

A Coram consisting of Ajay Sharma, Judicial Member observed that “In view of the aforesaid decision of the Tribunal, since the basis of the initiation of the current proceedings by the department for the period in issue itself has gone, the current proceedings can’t survive. Therefore in the peculiar facts of this case, following the aforesaid decision of the Tribunal, I am inclined to set aside the impugned order.”

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M/s. GP Petroleums Ltd vs Commissioner of CGST & Central Excise

Counsel for Appellant:   Shri Prabhat Kumar

Counsel for Respondent:   Shri Xavier Mascarenhas