The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that there is no bar on the assessee for claiming adjustment of tax demand from unutilized cenvat credit not been carried forward to GST regime.
The appellant, Uttaranchal Cable Network is in the business of ‘Cable Operator’ service. The appellant was registered under the Service Tax regime. However, they did not choose to carry forward or to migrate cenvat credit to the GST regime, being the closing balance as of 30.06.2017. Pursuant to carrying an examination of the data of the appellant on the ACES software, it appeared to Revenue that the appellant has mis-declared their turnover and furnished incomplete information in their ST-3 returns, with intent to evade payment of service tax. It also appeared that though the appellant has taken credit, some of the documents are not in their possession for support. Such facts came to the notice only in the course of inquiry and correspondence by the Department.
Accordingly, the appellant was required to show cause by notice dated 03.04.2018, as to why not the amount of service tax of Rs. 15,39,919/- be demanded being service tax short paid for the period 2014-15 to 2015-16 under the proviso to Section 73(1). Further, an appropriate amount of Rs.4,42,007/-, has been deposited. Further interest, as well as a penalty, was proposed under Section 78. It was further proposed to disallow cenvat credit of Rs. 66,542/- as not supported by documents. Further, interest was proposed on cenvat credit of Rs.2,97,289/- from the date of taking credit to the date of issuance of covetable invoice. It was further proposed appropriation of Rs. 1,28,700/-, deposited towards interest.
The appellant appealed against disallowance of adjustment of demand of service tax, relating to the period prior to 30.06.2017, out of the cenvat credit lying to their credit as of 30.06.2017.
The coram of Judicial Member, Anil Choudhary ruled that there is no bar or disability under Section 140(1) read with Section 142 of CGST Act, 2017 on an assessee for claiming adjustment of the tax demand from the unutilized cenvat credit (lying to the credit as on 30.06.2017), which has not been carried forward to the GST regime. The Commissioner (Appeals) has committed a mistake of law.
“Accordingly, I allow the appeal and set aside the impugned order of the Commissioner (Appeals). I further direct the Adjudicating Authority to grant adjustment of the unutilized amount of Rs.14,31,166/- against the demand payable by the assessee. The appellant shall be entitled to consequential benefits in accordance with the law,” the tribunal said.
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