The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that BSNL is a Public Sector Undertaking (PSU) and PSUs cannot have malafide intentions for non-discharge of duty.
The bench of Dr. Rachna Gupta (Judicial Member) And Hemambika R. Priya (Technical Member) has observed that appellant/assessee entitled for the availment of the Cenvat credit and the utilization or the discharge of their future liability vis-à-vis service tax and even Education Cess and Secondary Higher Education Cess. The appellant had been regularly filing its ST-3 returns and its records were being regularly audited by the department. Thus, the entire material was already to the notice of the department.
The appellant, BSNL had also availed credit on the strength of ATD with reference to Invoice No. 45 dated 15.05.10 of M/s Prithvi Information Solutions Ltd., Hyderabad (M/s PISL, in short) which did not bear any description of the service. Copy of the said invoice dated 15.05.10 showed that it actually relates to supply of goods such as Terminal, Muxponders, LW Transpondersm, spares, cables etc. and service tax too has been charged thereupon without referring to any service having been provided by M/s PISL to M/s BSNL.
It was noticed that while discharging the liability of Education Cess and Secondary & Higher Education Cess for the period October, 2010 to March, 2011 the party had cross utilized the available credit. Thus, although they could utilize credit of Rs. 5,36,685/- and Rs. 2,68,343/- for payment of Ed. Cess and S& H Ed. Cess, respectively, they paid their entire liability of Rs. 14,51,561 from the credit account. This has resulted in short payment.
A Show cause Notice was served upon the appellants proposing the recovery.
Proportionate interest and the appropriate penalties were also proposed to be recovered/ imposed. Said proposal has been confirmed. The demand of Cenvat Credit availed on improper documents and service tax for the period prior 01.07.2011 has been set aside.
The tribunal held that The entire Rule 3 is in regard to availment of Cenvat credit and therefore, sub-rules therein should only be read in conjunction, rather than in isolation with the main Rule. We draw our support to the department’s own Circular No. 267141/2009-Cx.8 dated 07.12.2009 which clarifies that Rule 3(5A) is applicable in respect of those capital goods on which Cenvat credit has been taken and waste/scrap has been cleared after a period of 10 years.
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Case Details
Case Title: M/s. General Manager, GMTD, BSNL Versus Commissioner of CGST, Customs & Central Excise
Case No.: Service Tax Appeal No. 50305 of 2017 [DB]
Date: 24.01.2025
Counsel For Appellant: B.L. Narasimhan
Counsel For Respondent: Rajeev Kapoor
