The division bench of the Karnataka High Court has held that an extended period of limitation cannot be invoked when CENVAT Credit availed on bona fide belief and acted in good faith.
The assessee, M/S ABB Limited, is engaged in the business of manufacturing and clearance of turbochargers, electric motors, transformers, etc., and also engaged in providing taxable output services such as management, and maintenance, repairs, etc.
Based on the intelligence report,apart from manufacturing, the respondent was also engaged in trading of electrical goods under the trade name ‘ABB’ and it had wrongly utilized the Cenvat credit for the trading activity hence theChief Commissioner of Customs held that the Cenvat credit was inadmissible for trading activities and it was disallowed.
On appeal, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that there was no evasion of payment of tax and set aside the demand for the extended period of limitation and confirmed the demand only for the normal period. Aggrieved, Revenue filed an appeal before the High Court.
The counsel for the assessee submitted that the show cause notice issuedwas based on the balance sheet wherein all activities of the assessee were truly declared and there was no suppression of material facts. The counsel for the assessee, by relying on the decision of the Division Bench of Madras High Court,in the case of Asstt. Commr. of GST& C. Ex., Chennai Vs Shriram Value Services Pvt. Ltdfurther submitted that when an assessee has acted in good faith, invoking an extended period of limitation is not tenable.
The Coram of Mr. Justice P.S.Dinesh Kumar and Mr. Justice Anant Ramanath Hegdeby relying on the decision in Shriram Value Services Pvt. Ltdhas held that the CENVAT credit availed on bona fide belief cannot be held to be done with an ulterior purpose for evading the Duty and therefore, the extended period of limitation would not be available to the Revenue Authority. The division bench dismissed the appeal.
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