Late Receipt of Invoice not attributable to Tax Collecting Authorities: Jharkhand HC refuses Refund of CENVAT Credit [Read Order]

The Jharkhand High Court while refusing the refund of CENVAT Credit has held that the late receipt of invoice is not attributable to tax collecting authorities.

The petitioner, M/s Rungta Mines Limited was registered under Central Excise Act, 1944 for manufacture of excisable goods in which the inputs Iron Ore, Coal, Dolomite etc. are used. The petitioner used to procure input i.e. coal, domestically as well as from outside the territory of India and for importing coal, the petitioner availed input services such as ‘Port Services’.

At the relevant point of time, the petitioner was also registered under Chapter V of the Finance Act, 1994 as a person liable to pay tax on receipt of taxable services under reverse charge mechanism as a recipient of “Goods Transport Agency Services”.

The dispute relates to the period 26.04.2017 to 29.04.2017, when the petitioner imported 23000 MT of Coal from outside the territory of India through Haldia Port under Bill of Entry dated 27.04.2017 for using the same in or in relation to manufacture of their final product i.e. Sponge Iron. For the purposes of clearance/handing of the said coal from Haldia Port, the petitioner received bundle of services under “Port Services” from Kolkata Port Trust, Haldia. M/s Kolkata Port Trust raised their Bill dated 23.05.2017 for value of Rs. 89,36,836/- including service tax component amounting to Rs. 10,88,328/-.

The division bench of Justice Aparesh Kumar Singh and Justice Anubha Rawat Choudhary held that the late receipt of the invoice is essentially between the petitioner and the port authorities and the tax collecting authorities had nothing to do in the matter. Certainly, the delay in receipt of original invoice is not attributable to the respondent authorities under the existing law or under the new law.

The authorities have held in the impugned orders that in the instance case, the timeline for claiming CENVAT Credit qua the service tax paid on port services was not followed by the petitioner, although the services were availed, the entire payment was made and the bill was also generated in the month of April/May, 2017. Further, it has also been held in the impugned orders that the petitioner not only failed to claim the CENVAT Credit as per law, but illegally claimed the credit of the same while filing service tax return although the petitioner was not entitled to do so as the petitioner was not registered as a service provider. The authorities have also held that the service tax paid on port service was not eligible for refund under the existing law as the said services were not utilised for export. 

“Thus, the petitioner on the one hand did not claim CENVAT Credit as per the procedure established by law under the existing law and on the other hand violated the provisions of law while filing his service tax returns and claimed the amount as input service and thereafter filed his petition for refund on 28.06.2018 referring to Section 142(3) of the CGST Act. The petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return,” the court noted.

To Read the full text of the Order CLICK HERE

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