2025-VIL-2105-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Rule 6(3)(II) of Cenvat Credit Rules, 2004 – Invoking of extended period of limitation – Demand of credit – Appellant is engaged in executing various works contracts and employed in taxable and exempted services – Appellant had reversed proportionate CENVAT Credit in terms of formula provided under Rule 6(3)(II) of the Rules – While considering the reversible CENVAT Credit, Appellant had taken into account only common input service credit and not total CENVAT Credit – Revenue issued show cause notice alleging that Appellant was required to take into account the total input credit, by invoking extended period of limitation – Commissioner confirmed demand as proposed in show cause notice – Whether Revenue had established its case for invoking extended period of limitation – HELD – Mens rea is central to all grounds for invoking extended period. To establish mens rea, assessee must have actively concealed, misrepresented, or taken affirmative steps to hide facts, rather than just failing to declare something they might have genuinely overlooked or misunderstood. When Appellant have been filing returns showing amount reversed by them, veracity of calculation could have been verified by department. Revenue missed that opportunity by not scrutinizing returns filed by Appellants. Extended period cannot be invoked in absence of any positive act with intention to evade payment of duty on part of Appellant. Revenue had not made any case for invoking extended period. On this count alone, impugned order is liable to be set aside – Appeal allowed
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