Rule 4(1) of CENVAT Credit Rules has prospective effect, Assessee can take CENVAT Credit after receipt of the relevant documents without any limitation: CESTAT

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Rule 4(1) of CENVAT Credit Rules has prospective effect that the assessee can take CENVAT Credit after receipt of the relevant documents without any limitation.

Shri Agnibesh Sengupta, Advocate appeared for the Appellant and Shri A.Roy, Authorized Representative appeared for the Respondent.

The Appellant, M/s. ITC Sonar, a unit of M/s.ITC Limited is a service provider under the categories of accommodation in Hotels, Inn, Guest House, Club or campsites etc. Service, Restaurant Service, Convention Service, Outdoor Catering Service etc. Before the introduction of the 3rd Proviso in Rule 4(1) of CENVAT Credit Rules, 2004w.e.f. 01.09.2014, an assessee was entitled to take CENVAT Credit in time after receipt of the relevant documents along with the goods specified therein.

 With effect from 01.09.2014, by introducing the 3rd Proviso in Rule 4(1) of CENVAT Credit Rules, 2004, it was provided that the manufacturer or the provider of output services shall not take CENVAT Credit after six months of the date of issue of any of the documents specified in Sub-Rule (1) of Rule 9.

Superintendent of Service Tax, Range-I,Kolkata informed the Appellant that on several occasions the Appellant had taken CENVAT Credit based on invoices of input services after six months of the date of the invoices and it was alleged that this had resulted in irregular availment of CENVAT Credit.

The Appellant submitted that the aforesaid proviso is prospective in the operation and did not affect the documents in dispute issued before 01.09.2014. Further stated that the credit had been taken based on invoicesissued before September 1, 2014, and such credit had been taken within a period of six months from the relevant date i.e. 01.09.2014.

The Show Cause Notice was adjudicated on the contest and the CENVAT Credit in question was disallowed. Further, interest was demanded and a penalty of an equal amount was imposed under Rule 15 of the CENVAT Credit Rules, 2004 read with section 78 of the Finance Act, 1994.Commissioner(Appeals)rejected the Appeal.

The single-member bench of CESTAT observed that the said proviso was introduced w.e.f. 01.09.2014 and there is no stipulation in the amending Notification that the same shall apply retrospectively. Rules of interpretation provide that whenever any statute is newly added, the same has got only prospective effect unless it is specifically provided in the amending statute or the amendment is by way of substitution of an existing provision mainly by way of clarification or removal of defects.

The CESTAT Bench of Shri P K Choudhary, member(judicial) observed that at the time of issuance of invoices, no time limit was prescribed and a limitation of six months cannot be made applicable. While allowing the appeal, the impugned orders were set aside.

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