Mere wrong availment of Cenvat Credit cannot be equated with suppression of fact, fraud intent to evade duty: CESTAT [Read Order]

The appellant, RPK India Pvt. Ltd. challenged the impugned Order-in-Appeal dated 31.08.2021 passed by the Commissioner (Appeals-I), Central Tax, Pune whereby the Commissioner rejected the appeal filed by the appellant while upholding the Order-inOriginal dated 15.12.2020.

The issue involved herein pertains to the alleged wrong availment of Cenvat Credit by the appellant of Service Tax paid on ‘outdoor catering services’ provided to its employees during the period January, 2015 to June, 2017 which, according to the department, do not qualify as an input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 post amendment effective from 01.04.2011. Accordingly a show-cause notice dated 22.01.2020 was issued proposing recovery of the inadmissible Cenvat Credit availed by the appellant culminating in the Order-in-Original dated 15.12.2020. The appeal filed by the appellant against the said Order-in-Original was rejected vide impugned order dated 31.08.2021.

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Counsel for the appellant fairly conceded that the issue on merits is no more res integra in view of the law laid down by the Hon'ble Supreme Court in the matter of Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner of Central Tax; 2021 and of the Larger Bench decision of the Tribunal in the matter of Wipro Ltd. vs. Commissioner of Central Excise wherein it has been held that w.e.f. 01.04.2011 Cenvat Credit on outdoor catering services is not admissible due to specific exclusion of the same from the definition of ‘input service’ as provided under Rule 2(l) of Cenvat Credit Rules, 2004.

Counsel assailed the demand on the ground of limitation as the show-cause notice has been issued by invoking the extended period of limitation. As per Counsel the period involved is January, 2015 to June, 2017 whereas the show-cause notice was issued on 22.01.2020 which is beyond the normal period.

According to Counsel the extended period has been wrongly invoked without there being any fraud, collusion or wilful suppression with intent to evade payment of duty which are pre-requisites for invoking the extended period. It is also the contention of learned Counsel that the appellant had availed the Cenvat Credit on the aforesaid service on a bona fide belief based on various contemporaneous decisions of the Tribunal favouring the taking of credit by assessee on the said service.

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Counsel for the appellant and Authorised Representative on behalf of Revenue and perused the case records including the written submissions and case laws placed on record by the respective sides.

A single bench of Ajay Sharma, Member (Judicial) found that issue relating to eligibility of availing Cenvat Credit on ‘outdoor catering service’ was subject to divergent views and was finally settled by the Supreme Court only the year 2021 in the matter of Toyota Kirloskar Motor Pvt. Ltd. and also by the Larger Bench of the Tribunal in Wipro Ltd. Till then this issue was interpretational in nature due to conflicting views of different forums. In such situation, as stated aforesaid, mere wrong availment of Cenvat Credit cannot be equated with suppression of fact, fraud or wilful misstatement with intent to evade duty. It was merely a question of interpretation at the relevant time due to divergent views as explained earlier.

As the show-cause notice has been issued by invoking the extended period of limitation, the same is not sustainable. Accordingly, the impugned order is set aside and appeal is allowed.

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