2025-VIL-944-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Rule 9(1) of Cenvat Credit Rules, 2004 – Denial of cenvat credit – Appellant as a financial intermediary entered into an agreement to provide services to a concern towards pre-payment of loans and obtaining No Due Certificate from financial institutions – Appellant outsourced said work to a sub-contractor – Sub-contractor provided services to Appellant and raised invoices for providing said services – Appellant availed cenvat credit on said invoice – Revenue issued show cause notice to Appellant alleging wrongful and fraudulent availment of CENVAT Credit on strength of invoice raised by service provider/sub-contractor – Adjudicating authority confirmed demand by denying cenvat credit – Commissioner (Appeals) confirmed order of adjudicating authority – Whether impugned order denying credit of Service Tax is sustainable – HELD – Reason for denial of cenvat credit is that service provider is a shell entity not engaged in any legitimate business as per alert letter issued by SEBI – Denial of cenvat credit cannot be based on alert letter issued by SEBI, which is much later about 16 months from date of obtaining of NOC through service provider – Non-payment of service tax by service provider cannot be a reason to deny cenvat credit to Appellant – Appellant has paid service tax, on which they have taken cenvat credit in terms of Rule 9(1) of the Rules, which has been duly reflected in their Books of Account as well as in their ST-3 Returns – Show cause notice issued to Appellant is highly barred by limitation –Cenvat credit cannot be denied to Appellant on merits as well as limitation – Impugned order passed by Commissioner (Appeals) set aside – Appeal allowed
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