No Plea of Ambiguity in Interpretation of provision on receipt of orders from Department relating to Erroneous Credit: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench observed that no plea of ambiguity can be made while interpretation of provision on receipt of orders from Department relating to erroneous credit.

After the merger of M/s. Sify Technologies Ltd. (STL) with M/s. Sify Communications Ltd. (SFL) as per the orders of the High Court of Madras, STL has received input service which are used for exempt service and also taxable services. The appellant availed the facility under Rule 6(3)(ii) of Cenvat Credit Rules (CCR) 2004, for the period from April 2008 to March 2010, as the Hon’ble High Court’s order covered the period from 1.4.2008.

The Counsel for the appellant argued that reversal of CENVAT credit tantamount to non-availment of input service credit on common inputs and hence imposition of interest and penalty is unsustainable. The provisions of Rule 6 of CCR are very clear and without any ambiguity. The appellant has been suo moto taking credits even after the issue of previous show cause notices.

The Supreme Court in a seven Judge Bench judgement in the case of Smt. Ujjam Bai Vs State of Uttar Pradesh, have held that the binding force of a decision which is arrived at by a taxing authority acting within the limits of the jurisdiction conferred upon it by law cannot be made dependent upon the question whether its decision is correct or erroneous. For, that would create an impossible situation. Therefore, though erroneous, its decision must bind the assessee. The Bench consisting of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “In the light of the stated position of law by the Apex Court, the appellant after receipt of orders from the department relating to erroneous credit taken by them as per Rule 6 of CCR 2004, cannot continue to plead ambiguity in the interpretation of the said provision and claim that having reversed wrongly taken credits – that too as per their interpretation of the Rule – the imposition of interest and penalty is unsustainable

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