Date – 21 August 2023

Parties: M/s GD Goenka Private Limited. Vs. The Commissioner of Central Goods and Services Tax

Facts – 

• The Appellant, M/s GD Goenka Private Limited, had availed CENVAT credit on input services used for constructing school buildings and utilized it to pay service tax on franchisee and property renting services.
• According to the Revenue, this credit is ineligible because the input services were used in constructing the school building to provide school education which is an exempted service.
• The Commissioner's order demanded recovery of wrongly availed CENVAT credit, citing there is  no direct nexus between input services and taxable franchisee services and also invoked extended limitation, claiming wilful suppression.

Issue – 

• Whether the appellant is eligible for CENVAT credit on input services used for constructing school buildings and used in franchisee and property renting services?

Order – 

• The Tribunal observed that the central excise officer has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed.
• Although the Central Excise Officer is empowered to scrutinise all the Returns call for records and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of same Returns and as a result is unable to discover any short payment of tax within the period of limitation, neither the assessee nor the officer is responsible for such loss of revenue. Such a loss of Revenue is the risk taken by the Board as a matter of policy.
• Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent.
• Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit.
• Hence the appeal is allowed to the extent of denial of CENVAT credit or Rs. 1,45, 724 on the architectural services during the period 2011-12 and interest thereon and order of its recovery.