The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded BSNL’s CENVAT credit claims for re-verification focusing on allegations of double credit availed for the same supply of goods or services.
BSNL, a public sector undertaking, availed CENVAT credit for telecommunication services from October 2009 to March 2011. The credit claims included amounts based on cover notes issued by suppliers for balance payments after initial partial payments upon receipt of goods or services. The total disputed credit claimed under cover notes was Rs. 68,41,900.
During an audit, the revenue authorities alleged that BSNL had availed credit twice for the same supply. one using the original invoices and again on the cover notes. Cover notes were deemed inadmissible as valid documents under Rule 9 of the CENVAT Credit Rules, 2004.
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A show cause notice was issued demanding recovery of Rs. 68,41,900 and penalties under Section 78 of the Finance Act, 1994. The adjudicating authority upheld the revenue’s decision, confirming the demand and imposing penalties.
On appeal before the CESTAT, the appellant’s counsel argued that cover notes were supplementary documents referring to original invoices and were used for ensuring the quality and completeness of the service or goods delivered.
The appellant’s counsel also submitted that any over-credit was corrected by voluntarily depositing Rs. 36,95,964 before the issuance of the show-cause notice. The revenue counsel countered that BSNL failed to provide adequate evidence showing that credits claimed on invoices and cover notes were not duplicated.
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The two-member bench comprising P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that the matter required factual verification of whether BSNL had claimed credit twice for the same supply.
The tribunal noted that neither the adjudicating authority nor the appellant had conclusively shown the absence of duplication.
The tribunal remanded the issue to the original adjudicating authority, directing a thorough re-verification of the appellant’s claims with supporting documentation. The tribunal also invoked Section 80 of the Finance Act, 1994, to waive penalties, considering the appellant company’s status as a public sector undertaking and the absence of malafide intent.
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The tribunal directed that the re-adjudication be completed within three months. The appellant’s appeal was partially allowed with the matter sent back for further verification.
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