2025-VIL-718-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cenvat Credit, Proportionate Reversal, Rule 6(3)(ii), Limitation Period, Principles of Natural Justice - Appellant availed Cenvat credit of Service Tax paid on common input services on proportionate basis, by following the procedure prescribed under Rule 6(3)(ii) of the Cenvat Credit Rules - Department alleged that the appellant had taken Cenvat credit of entire tax paid on common input services and as the appellant was not maintaining separate records for inputs used exclusively for exempted services, they would be liable to pay an amount calculated as per Rule 6(3)(i) of the Cenvat Credit Rules - Whether the delay in filing the appeal before the Commissioner (Appeals) can be condoned – HELD - The delay in filing the appeal was not intentional and the appellant did not gain anything by delaying the filing of the appeal. The Tribunal relied on the decisions in Central Industries Security Force and Jagdish Ispat Pvt Ltd, which held that a liberal approach should be adopted for condonation of delay as a litigant does not stand to benefit by lodging an appeal late and refusal to condone the delay can result in a meritorious matter being thrown out at the very threshold, defeating the cause of justice. Therefore, the delay in filing the appeal is condoned - the Commissioner, in the earlier Order-in-Original, had found that the extended period of limitation was wrongly invoked as the facts were already known to the Department during the earlier audit. Therefore, the Show Cause Notice is not maintainable on the ground of limitation - Taking in to account other factors that the Show Cause Notice is vague and non-specific, the same does not have any chance of survival - the impugned OIO and OIA are not maintainable – The appeal is allowed - Whether the Show Cause Notice is valid and sustainable – HELD - The Show Cause Notice was vague and did not provide the necessary details such as the input service on which credit was wrongly taken, the period for which the notice was given, the source for computation of duty, etc. This was in violation of the principles of natural justice as the appellant could not file a suitable reply in defence - Further, this was the second Show Cause Notice issued on the basis of the same audit objection. The Department had already invoked the extended period of limitation in the first Show Cause Notice, which was dropped by the Commissioner in the earlier Order-in-Original. The Tribunal held that the extended period of limitation cannot be invoked in the subsequent Show Cause Notice, as per the principles laid down in the Nizam Sugar Factory case.
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