M/S Cyquator Media Services P. ... vs Union Of India Thru' Its Secy. & 2 ...
2017 Latest Caselaw 7130 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved on: 09.11.2017
 
Delivered on:20.11.2017
 
                 
 

 
Court No. - 4
 

 
Case :- WRIT TAX No. - 750 of 2017
 

 
Petitioner :- M/S Cyquator Media Services P. Ltd. Thru' Auth. Signatory
 
Respondent :- Union Of India Thru' Its Secy. & 2 Others
 
Counsel for Petitioner :- Nishant Mishra
 
Counsel for Respondent :- Ashok Singh, Gautam Chaudhary
 

 
Hon'ble Abhinava Upadhya,J.

Hon'ble Ashok Kumar,J.

(Delivered by Ashok Kumar, J.)

1. Heard Sri Madhav Rao, Advocate assisted by Sri Nishant Mishra and Ms. Nandita Narayan, learned counsel for the petitioner and Sri Ashok Singh, learned Senior Standing Counsel for the Department.

2. By means of present writ petition, the petitioner has prayed for quashing of the order dated 16.08.2017 passed by Commissioner of Service Tax, Central Excise and CGST Commissionerate, NOIDA and in alternative prayed for a mandamus directing the Assistant Registrar, Customs Excise & Service Tax Appellate Tribunal, Allahabad (CESTAT) to dispense the petitioner from discharging pre-deposit to a tune of 7.5% of the assessed duty while filing the appeal against the order dated 16.08.2017.

3. With the consent of learned counsel for the parties, the writ petition is being disposed of at the admission stage itself.

4. The brief facts of the case are that the petitioner is a company indulged in business activities being "Call Centre". There are two premises from where the petitioner is carrying out its call centre activities namely; (a) A94/7, Section-58, NOIDA, U.P. called as Sector 58 premises and (b) FC-19, Film City, Sector 16-A, NOIDA, U.P. (Sector 16A premises). According to the petitioner, no other place is belong to the petitioner from where the petitioner's company is carrying out its call centre activities in the state of U.P.

5. A show cause notice was issued for the period of 2011-12 to 2014-15, by the adjudicating authority to the petitioner in which it has been alleged that the petitioner had availed illegal CENVAT Credit owing the three irregularities mentioned in the show cause notice. For the ready reference three points are quoted hereinbelow:

(a) Invoices raised during the period 2011-12 to 2014-15 (up to September, 2014), on the basis of which petitioner availed credit, did not have the address of the registered premises of the petitioner but had the name and address of the petitioner where the services were being received and from which the output service is being performed. Credit held to be inadmissible is Rs.18.35 crores.

(b) Invoices for the period 2011-12 to 2012-13 contain the erstwhile name of the petitioner prior to its merger on 02.12.2011. Credit held to be inadmissible is Rs.89.10 lakhs.

(c) After merger on 02.12.2011, the petitioner was not registered for a period of 2 months from January 2012 to March 2012 with the Service Tax Department, no credit will be eligible for the input/input services availed during the said period. Credit held to be inadmissible is Rs.98.19 lakhs.

6. With regard to the above issue/point no.(a), the petitioner has submitted that admittedly there are two premises out of which the premises at Sector 58, NOIDA is unregistered and other premises at Sector 16-A is registered premises. In its reply, the petitioner has submitted that the petitioner's company is carrying out its call centre service from Sector 58 premises. However, all the belongings and invoices have been done from the registered premises situated at Sector 16 A, NOIDA. It is the case of the petitioner that since the services were rendered from unregistered premises, the invoices so raised on the petitioner by its vendors were on the said unregistered address. According to the petitioner, the petitioner tried to get the unregistered premises situated at Sector 58, to be registered. However, due to some technical issues as well as difference with the landlord, the petitioner's company could not get the premises situated at Sector 58 to be registered.

7. The case of the department is that since the invoices were raised in the name of unregistered premises, therefore, the petitioner's company is not eligible to claim the CENVAT Credit.

8. According to the learned counsel for the petitioner, there is no provision under the CENVAT Credit Rules, 2004 nor in Service Tax Rules, 1994 which mandates/provides that the registered address of the recipient is mandatory and has to be mentioned in the invoices for the availment of the credit. He has placed relevant provision namely Rule 9 of the CENVAT Credit Rules, 2004 and Rule 4A of the Service Tax Rules, 1994. For the ready reference, the relevant provision of Rule 9 and Rule 4A aforesaid are quoted hereinbelow:

Rule 9 - Documents and accounts-----

(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely:-

(f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of September, 2004: or

(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document:

Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for the in the books of the account of the receiver, he may allow the CENVAT credit].

Further, Rule 4A of the Service Tax Rules is reproduced hereunder:

RULE 4A. Taxable service to be provided or credit to be distributed on invoice, bill or challan.-(1) Every person providing taxable service shall, not later than fourteen days form the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier,] issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorised by him [in respect of such taxable service provided or to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:-

(i) The name, address and the registration number of such person;

(ii) the name and address of the person receiving taxable service;

(iii) description, classification and value of taxable service provided or to be provided; and

(iv) the service tax payable thereon.

9. The counsel for the petitioner, therefore, has submitted that in view of the aforesaid relevant rules, it is evident that the documents on the basis of which the credit can be availed unless requires following namely: (a) name, address and registration number of the person providing the taxable service (b) name and address of the recipient (c) description of the taxable service and (d) the service tax payable.

10. Learned counsel for the petitioner, thus, submitted that from perusal of the aforesaid requirement, it is clearly evident that the registered address of the recipient and that the registration number of the recipients not a mandatory requirement to be mentioned on the invoices. He has further submitted that it only requires the registration number of provider of the service. According to the petitioner, since there is no violation on the part of the petitioner's company of any of the aforesaid provisions of the Act or the Rules, the denial of the CENVAT Credit to the petitioner by the Commissioner is wholly illegal and arbitrary.

11. Learned counsel for the petitioner has further submitted that in the case of the writ petitioner, on the same set of facts, the same Commissioner, Service Tax, Delhi vide its order dated 30.11.2015 (relevant period from 2005-06 to 2010-11), has held that under the provisions there is no requirement for the registered premises of the recipients to be mentioned on the invoices in order for the recipients to avail the credit.

12. Learned counsel for the petitioner has placed the relevant extract of the order of the Commissioner dated 30.11.2015 which is quoted hereinbelow:

"21.7 The noticee has argued that the clause (ii) requires the name and address of the person receiving taxable service but not the 'registered address'. In the present case, the person receiving the taxable service is the Noticee and this fact has not been disputed by the revenue. Thus, an invoice issued to the address of the office of the Noticee is an invoice issued to the Noticee. (emphasis supplied)

21.10 Thus, the requirement of law is that the input services should be receipt and accounted for providing the out put service. The litmus test for allowing Cenvat credit is the receipt and accounting of the input services for providing out service and proviso of Rule 9(2) of the Cenvat Credit Rules, 2004, which also hints at ignoring the procedural lapses in case credit invoices contains main particulars namely, service tax payable, description of the taxable service, assessable value, service tax registration number of the person issuing the invoice, name and address of the provider of taxable service.

21.11 The issue is also settled by several judicial pronouncements. The Hon'ble Tribunal in the case of Manipal Advertising Services Pvt. Ltd v. Commissioner of Ccentral Excise, Mangalore 2010 (10) STR 506 (Tri-Bang), allowed the credit availed, even though the address on the invoice was not the same as the registered address."

13. Learned counsel for the petitioner has informed the court that the Revenue has not filed any appeal against the order dated 30.11.2015 passed by the Commissioner by which the Commissioner has held that under the provision, there is no requirement for the registered premises of the recipients to be mentioned on the invoices. This fact has been accepted by Sri Ashok Singh, learned counsel representing the respondents.

14. According to the petitioner, since this issue is squarely covered in favour of the petitioner and there is no requirement for registered premises of the recipients under the law which is to be mentioned on the invoice, the proceedings began by the Commissioner are invalid as such without jurisdiction and contrary to the provision of law.

15. Counsel for the petitioner has submitted that by the impugned order dated 16.08.2017 (annexure-1 to the writ petition) the Commissioner has held otherwise and has disallowed the CENVAT Credit amounting to Rs.18,35,37,582/- allegedly wrongly taken by the petitioner's company as such he has passed the order to recover the same under Rule 14 of the CENVAT Credit Rules, 2004 read with provision of Section 73(1) of the Finance Act, 1994.

16. Counsel for the petitioner has pointed out that apart from the aforesaid issue which, in fact, squarely covered in favour of the petitioner's company, there are two other issues involved in the present proceedings namely (a) that the invoice for the period 2011-12 to 2012-2013 contained the erstwhile name of the petitioner prior to its merger dated 02.12.2011, therefore, according to the adjudicating authority the amount of Rs.89,10,937/- is inadmissiable and the other issue no.(b) relates to after merger on 02.12.2011, since the petitioner's company was not registered for the period of two months from January, 2012 to March, 2012 with the Service Tax Department, therefore, the petitioner's company is not entitled/eligible for input credit/input service availed during the aforesaid period.

17. According to the department, the credit, therefore, is inadmissiable to the tune of Rs. 98.90 lakhs.

18. Learned counsel for the petitioner has submitted, with regard to the issue No.(b) as mentioned hereinabove, that the invoices raised by the input service provider bore name either of M/s Essel Business Processes Ltd. or Integrated Subscriber Management Services Ltd., which is erstwhile name of the petitioner's company in the year 2011 pursuant to the order of the Hon'ble Bombay High Court in Company Scheme Petition No.604 and 605 of 2011 M/s Essel Business Processes Ltd.(Essel) dated 2nd December, 2011 was disallowed and was consequently merged with the petitioner's company namely M/s Cyquator Media Services Pvt. Ltd.

19. Counsel for the petitioner, therefore, has submitted that the petitioner's company is entitled to avail the CENVAT Credit being the resulting company after the merger. He, therefore, submitted that the Commissioner, has not examined the issue while disallowing the CENVAT Credit amount to Rs. 89,10,937/- on the strength of invoice not issued in the name of the petitioner's company, therefore, has directed to recover the aforesaid amount.

20. Learned counsel for the petitioner has relied upon several decisions and submitted that this issue is clearly covered in favour of the petitioner's company, therefore, he has submitted that the Commissioner has not justified in taking a different view and disallowing the CENVAT Credit for which petitioner's company is entitled.

21. Counsel for the petitioner has submitted that this Court in the case of Ganesh Yadav vs. Union of India and others 2015(320) ELT 711 (Allahabad) has held as follows:

"9...... Above all, as the Supreme Court held in Shyam Kishore (supra), the High Court under Article 226 of the Constitution is vested with the jurisdiction in an appropriate case to dispense with the requirement of pre-deposit and the power of the Court under Article 226 is not taken away. This was also held by the Supreme Court In P. Laxmi Devi(supra) in which the Supreme Court observed that recourse to the writ jurisdiction would bot be ousted in an appropriate case. Whether the writ jurisdiction under Article 226 should be exercised, having due regard to the discipline which has been laid down under Section 35F of the Act, is a separate matter altogether but it is important to note that the power under Section 226 has not been, as it cannot be, abridged."

22. Apart from the aforesaid, the counsel for the petitioner has submitted that several tribunals have dropped the demand for recovery of CENVAT Credit on the issue no. (a) that the invoices showed that the address of unregistered premises and not registered address. Counsel for the petitioner, therefore, submits that the judgment of the CESTAT being the highest authority under the statute are binding, and in the present case, the decision of the Commissioner in the case of erstwhile company of the present petitioner, on the similar set of fact, is binding which squarely covers the controversy in hand.

23. In this regard, counsel for the petitioner relied upon the decision of the Hon'ble Supreme Court in Union of India vs. Kamlakshi Finance Ltd. Reported in 1991 55 ELT 433 (SC), in which the Hon'ble Supreme Court has held that all subordinate authorities are bound by the decisions of the Tribunal and such decisions have to be followed unreservedly by the subordinate authorities.

24. Learned counsel for the petitioner has submitted that the registration with the department is not a pre-requisite to avail the CENVAT as Rules do not mandate such registration for availing credit. Counsel for the petitioner, therefore, submits that the order passed by the Commissioner disallowing the CENVAT Credit amounting to Rs.98,19661/- on the ground that the petitioner's company was not registered with the service tax department, therefore, the said amount is recoverable from the petitioner's company.

25. On the other hand, learned counsel for the Revenue has submitted that there is alternative remedy available to the petitioner to challenge the order of the Commissioner dated 16.08.2017 before the CESTAT. He has further submitted that in view of the alternative remedy the present writ petition is not maintainable.

26. Counsel for the department has further submitted and placed the provision of Section 69 of the Finance Act, 1994 which is quoted hereinbelow;

Section 69 Registration

(1) Every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise.

(2) The Central Government may, by notification in the Official Gazette, specify such other person or class of persons, who shall make an application for registration within such time and in such manner and in such form as may be prescribed.

27. According to the counsel for the Revenue, Section 69 of the Finance Act, 1994 would go to show evidently make it clear that every person liable to pay the service tax has got to make himself registered. Further for the purposes of the controversy in question Rule 4 of the Service Tax Rules is very relevant wherein the provision for Registration has been provided and I this context attention is invited to Rule 4[(1A) sub clause (2)] which provides for a centralised billing system or centralized accounting system where such centralised billing or centralised accounting systems are located in one or more premises.

28. Learned counsel for the Revenue has admitted that so far as the issue No.(a) is concerned, the department has not challenged the order of the Commissioner dated 30.11.2015 as admittedly no appeal has been filed. He has fairly accepted that so far as issue no.(a) is concerned the same attained finality. However, he has submitted that the decision of the Commissioner dated 30.11.2015 relates to the period from 2005-06 to 2010-11 where the company namely M/s ESSEL Business Process Ltd or Integrated Subscriber Management Service Ltd, and erstwhile name of the present petitioner's company was carrying on the business and the order has been passed by the Commissioner in the case of aforesaid company which was registered with the Service Tax Department under Section 69 of the Finance Act, 1994 read with Rule 4 of Service Tax Rules, 1994.

29. The counsel for the Revenue has submitted that the present company came into existence after dissolving of the erstwhile company and consequently the erstwhile merger with the present petitioner's company is habitual in not following the procedure and the provision of law. He has submitted that once in the previous period in the case of erstwhile company, this issue was involved and has been decided, it was obligatory on the part of the petitioner's company to fill up the lakuna and get the registration as required under law, which the petitioner's company admittedly has failed to do so. Counsel for the Revenue has further submitted that in the present proceeding, there are two other issues which are considered and decided by the Commissioner by its order dated 16.08.2017 which are yet to be adjudicated on merit by the Tribunal, therefore, there is no force in the submission of the counsel for the petitioner and on this pretext alone the writ petition be dismissed as in the present case admittedly the alternative remedy is available to the petitioner.

30. At the end, learned counsel for the Revenue has submitted that it is admitted fact that the second office of the petitioner's company was unregistered office coupled with the fact that the petitioner had not taken centralised registration nor made any endeavor to take registration or declare his  branch office in the required survey, the benefit of procedural lapse in the earlier adjudication cannot be granted nor can be continued.

31. We have heard the learned counsel for the petitioner and learned standing counsel and gone through the record.

32. We find that the petitioner has sought in these proceedings are restraining the respondents from enforcing the mandatory requirement of a pre-deposit of 7.5% of the duty demand in pursuance of the order dated 16.08.2017 passed by the adjudicating authority. In this regard, it is relevant to mention here that enactment of relevant provision in Section 35 F of the Central Excise Act, 1944 (hereinafter referred as 'The Act') which deals with regard to deposit, pending bill of duty demand or penalty levy.

33. In this background, it is relevant to mention here that the Parliament while amending the provisions of Section 35F of the Act has required the payment of 7.5 percent of the duty in case the duty and penalty are in dispute or the penalty where such penalty is in dispute. In the case of an appeal to the Tribunal against an order passed by the Commissioner (Appeals), the requirement of deposit is 10% of the duty or as the case may be, the duty or penalty or of the penalty where the penalty is in dispute. The first proviso restricts the amount to be deposited to a maximum of Rs. 10 crores. Prior to the amendment, the Commissioner (Appeals) or the Appellate Tribunal were permitted to dispense with such deposit in a case of undue hardship subject to such conditions as may be imposed so as to safeguard the interest of the revenue. Stay applications and the issue of whether a case of undue hardship was made out, gave rise to endless litigation. There would be orders of remand in the litigative proceedings. All this was liable to result in a situation where the disposal of stay applications would consume the adjudicatory time and resources of the Tribunal or, as the case may be, of the Commissioner (Appeals). Parliament has stepped in by providing a requirement of a deposit of 7.5% in the case of a First Appellate remedy before the Commissioner (Appeals) or to the Tribunal. The requirement of a deposit of 10% is in the case of an appeal to the Tribunal against an order of the Commissioner (Appeals). This requirement cannot be regarded or held as being arbitrary or as violative of Article 14. Above all, as the Supreme Court held in Shyam Kishore (supra), the High Court under Article 226 of the Constitution is vested with the jurisdiction in an appropriate case to dispense with the requirement of pre-deposit and the power of the Court under Article 226 is not taken away. This was also held by the Supreme Court in the case of P. Laxmi Devi [2008(4) SCC 720] in which the Supreme Court observed that recourse to the writ jurisdiction would not be ousted in an appropriate case. Whether the writ jurisdiction under Article 226 should be exercised, having due regard to the discipline which has been laid down under Section 35F of the Act, is a separate matter altogether but it is important to note that the power under Article 226 has not been, as it cannot be, abridged. That leads the Court to the next aspect of the matter as to whether the requirement of pre-deposit would apply in a situation such as the present.

34. In the present case, as we find that the adjudicating authority namely Commissioner himself has held that in regard to the issue no.(a) of Rs.18.35 crores the Commissioner has dropped the demand for recovering of CENVAT Credit on the similar set of facts where the Commissioner has held under Rule 4(A) of Service Tax Rules, 1994, the requirement is only to "the name and address of the person receiving the taxable service" and there is no requirement that the name and registered address of the person receiving the taxable service are appeared on the invoice for taking input service credit and this has been repeatedly laid down by the various CESTAT Tribunals.

35. Admittedly, against the order of the Commissioner dated 30.11.2015 no appeal has been preferred by the Department, therefore, in similar set of fact, the denial of the CENVAT Credit is appears to be prima facie wrong which requires consideration by the CESTAT.

36. In view of the aforesaid reason, we accept the prayer of the petitioner in part that petitioner be dispensed with the condition of pre-deposit of 7.5% for entertainment of the appeal by the appellate Tribunal with respect of issue no.(a).

37. However, on the facts and circumstances of the case, with regard to other issue namely the issue no.(b) on the ground that in the invoice mentioned the erstwhile name of the company namely M/s Essel Business Processes Ltd./ Integrated Subscriber Management Services Ltd. instead of mentioning the name of the present writ petitioner's company after the merger pursuant to the order of Bombay High Court dated 02.12.2011 namely Cyquator Media Services Pvt. Ltd and the other issue No.(c) on the ground that the petitioner's company was registered with effect from March, 2012 only and the invoice issued prior to the registration from January, 2012 to March, 2012 were ineligible for availing credit. The aforesaid two issue involving a dispute and approximate denial of CENVAT Credit of Rs.89.10 lakhs + 98.19 lakhs total sum of Rs.187.29 lakhs (approximately) is yet to be decided by the CESTAT for which we refuse to accept the claim of the petitioner, and therefore, we hereby direct the petitioner to comply with the pre-condition so as provided under Section 3F of the Central Excise Act, 1954.

38. The writ petition is, accordingly, allowed in part as indicated hereinabove.

Order Date :-20.11.2017

A.Kr.*

[Ashok Kumar, J.]          [Abhinava Upadhya, J.]