Cenvat Credit Availment in Service Tax and ExciseCenvat Credit can be allowed on Computer Generated invoices bearing no signature

February 9, 20160

Issue

Whether Cenvat Credit can be  availed on the basis of computer generated invoices bearing no signature but  a declaration that  “This computer generated paper does not need signature”.

Dispute

Revenue disputed that the computer generated invoices bearing a declaration “This computer generated paper does not need signature”  are not valid documents to avail cenvat Credit under Cenvat Credit Rules,2004 .

Besides, some invoices of the noticee were lost in flood in Surat as well.

The learned Commissioner confirmed the demand proposed under the SCN.

The issue was handled by Shri Anand Mishra, Advocate in CESTAT .

Tribunal

Honourable Tribunal allowed the appeal by way of remand and made the following observations  :

 a.Cenvat Credit can be allowed on Computer Generated invoices bearing no signature but  a declaration that  “This computer generated paper does not need signature if it satisfies conditions under proviso to Rule 9(2) of CCR,2004 …….Para 5

“….. it is clearly evident that the appellant fulfilled the conditions as prescribed in 9(2) of Cenvat Credit Rules, 2004 in respect of the invoices of input service credit availed by them. Rule 9 of the Cenvat Credit Rules 2004 provides that the Cenvat Credit shall be taken by the manufacturer or the provider of the output service or input service distributor as the case may be, on the basis of the documents mentioned therein.

Sub-Rule (2) of Rule 9 of the Rule 2004 provides that no Cenvat Credit under Sub-Rule (1) of the said Rule shall be taken unless all the particulars as prescribed under the Central Excise Rules 2002 or the Service Tax Rules 1994, as the case may be, are contained in the document. Proviso to Rule 9 (2) of Rules 2004 had given the power to Deputy Commissioner of Central Excise or the Asstt. Commissioner of Central Excise, as the case may, to allow the credit in certain circumstance ”

 

b.Discretionary Power under Rule 9(2) of CCR,2004 cannot be exercised in an arbitrary manner ….Para 6

“The proviso to Rule 9(2) had given a discretionary power to the Deputy Commissioner of Central Excise or to the Asstt. Commissioner to allow the Cenvat Credit subject to fulfilment of the condition as contained in the said proviso.

Legislature has given power to the concerned office to solve the problem in case the documents are incomplete and to allow cenvat credit. Such discretionary power cannot be exercised in an arbitrary and vague manner.”

The arbitrary exercise of discretionary power is injustice and it remains unchecked in the long run to become disparities.

c. Evidence gathered under RTI Act,2005  ….Para 6

“In the present case, the letter dtd 29.10.2009   obtained through RTI Act, 2005 would clearly show that the condition of Rule 9(2)were fulfilled. It is also noticed that on the identical situation, the Commissioner of Central Excise allowed the credit in respect of the other assessee.

 

The entire order is reproduced herein below :

 

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,West Zonal Bench, Ahmedabad

Appeal No.                         :               ST/10063-10064/2013

 

[ Arising out of  OIO-05/SERVICETAX/2012 and OIO-06/SERVICETAX/ 2012 dtd 25.9.2012 passed by Commissioner of Central Excise and Service Tax-SURAT-I]

 

M/s Dewshree Network P Ltd                    –              Appellant(s)

 

Vs

 

Commissioner of Central Excise and

Service Tax-SURAT-I                                                       –              Respondent (s)

 

Represented by               :

 

For Assessee     : Shri Anand Mishra, Advocate

For Revenue      : Shri Sameer Chikara, Authorised Representative

 

CORAM :

Mr. P.K. Das, Hon’ble Member (Judicial)

Mr. P.M. Saleem, Honble Member (Technical)

 

Date of Hearing / Decision :  10-12-2015

ORDER No. A/11819-11820/2015  dtd 10/12/2015

 

Per :  Mr.P.K. Das,

Common issue is involved in these appeals and therefore, both are taken-up together for deposal.

 

  1. After hearing both sides and on perusal of the record, we find that the appellants were engaged in providing the service under the category of Cable Operators Service, Business Auxiliary Service and Broadcasting   Service. They received input service viz., Broadcasting Service from various channels and availed credit thereon. By the impugned Adjudication order, cenvat credit was denied on the input service mainly, on the ground that the computer generated invoices were not signed by the service provider amongst others. According to Revenue, Rule 4A of the Service Tax Rules 1994 categorically prescribed that the invoices/challans should be signed by service provider.

 

  1. The Ld. Advocate submits that after receipt of the impugned order, they have collected some document and information under the RTI Act, which are relevant for adjudication of the present case. By letter dtd 13.2.2014, CPIO and Asstt. Commissioner, Central Excise and Customs, Div. II, Surat-I, forwarded the appellant a copy of the letter dtd 29.10.2009 of the Supdt. Of Central Excise, Surat-I, addressed to the Superintendent (Adjn). The relevant portion of the said letter dtd 29.10.2009 is reproduced below:

Sub:  Draft Show Cause Notice for issuance to M/s Dewshree Network

Pvt Ltd, Surat M/R

 

Please refer to your office letter No VV/ST/3-13/2009 dt 24.8.2009 on the above subject wherein it was asked for re-examination of the DSCN proposed for recovery of cenvat credit:

  1. amounting to Rs 1,18,41,937/- on grounds of cenvat credit taken on unsigned invoices bearing declaration that “This computer generated paper does not need signature”.
  2. amounting to Rs 30,31,575/- on grounds of cenvat credit taken on documents lost in flood on 6.8.2006.

 

In view of provisions laid down under Rules 9(2) of cenvat credit Rules, 2004 as amended.

 

Accordingly, the documents namely, bank statements, list of Input Service Providers, Debtors ledger, statements showing total credit taken and utilized, intimation letter submitted to the service tax dept. For lost of records in flood were called for from the assessee and the same are verified. The said availability of cenvat credit was also discussed with the additional Commissioner (S.Tax) and following conclusions in the said matter are arrived.

 

Even though the conditions prescribed under Rule 9(2) of cenvat credit Rules, 2004 are incorporated in the input service invoices and other conditions are fulfilled, the same do not bear signature of the assessee or their authorised person which is a mandatory provision prescribed under Rule 4A(1) of Service Tax Rules 1994. And in this view, the said input service invoices are not proper documents for availing cenvat credit.

 

The DSCN may be issued as the earliest to safe guard Govt Revenue as the huge amount of cenvat credit is involved.

 

  1. He further submits that the Commissioner of Central Excise & Customs, Surat-I vide OIO No. SUR-EXCUS-001-COM-107-13-14 dtd 31.1.2014 in the case of M/s Surat Cable Network on the identical issue dropped the demand.

5.On close reading of the above letter dated 29.10.2009, it is clearly evident that the appellant fulfilled the conditions as prescribed in 9(2) of Cenvat Credit Rules, 2004 in respect of the invoices of input service credit availed by them. Rule 9 of the Cenvat Credit Rules 2004 provides that the Cenvat Credit shall be taken by the manufacturer or the provider of the output service or input service distributor as the case may be, on the basis of the documents mentioned therein. Sub-Rule (2) of Rule 9 of the Rule 2004 provides that no Cenvat Credit under Sub-Rule (1) of the said Rule shall be taken unless all the particulars as prescribed under the Central Excise Rules 2002 or the Service Tax Rules 1994, as the case may be, are contained in the document. Proviso to Rule 9 (2) of Rules 2004 had given the power to Deputy Commissioner of Central Excise or the Asstt. Commissioner of Central Excise, as the case may, to allow the credit in certain circumstance. For the proper appreciation of the case, proviso to Rule 9(2) of the Rule 2004 is reproduced below:

 

2) No CENVAT credit under sub-rule(1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document:

Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax Registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit.

  1. The Supdt. of Central Excise by letter dated 29.10.2009 stated that the conditions prescribed under Rule 9(2) of Cenvat Credit Rules 2004 were fulfilled. The proviso to Rule 9(2) had given a discretionary power to the Deputy Commissioner of Central Excise or to the Asstt. Commissioner to allow the Cenvat Credit subject to fulfilment of the condition as contained in the said proviso. Legislature has given power to the concerned office to solve the problem in case the documents are incomplete and to allow cenvat credit. Such discretionary power cannot be exercised in an arbitrary and vague manner. In other words, it should be exercised in all reasonable and fairness. The arbitrary exercise of discretionary power is injustice and it remains unchecked in the long run to become disparities. In the present case, the letter dtd 29.10.2009 obtained through RTI Act, 2005 would clearly show that the condition of Rule 9(2)were fulfilled. It is also noticed that on the identical situation, the Commissioner of Central Excise allowed the credit in respect of the other assessee. Hence, there is no justification to deny the credit on input service. However, it is required to examine the documents and therefore the matter is sent back to the Adjudicating Authority to decide afresh after considering the documents and other facts in so far as lose of original invoices due to flood.

7 .           In view of the above discussion, we set aside the impugned order. Both the matters are remanded to the adjudicating authority to decide afresh in accordance with law. Needless to say that the Adjudicating Authority shall give proper opportunity of hearing before passing order. Both the appeals are allowed by way of remand.

 

(Dictated and pronounced in the Court)

 

 

(P.M. Saleem)                                                                                                 (P.K. Das)

Member (Technical)                                                                                        Member (Judicial)

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(Source : cestat.gov.in )

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