PUNJAB NATIONAL BANK Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) TWO stay petitions filed in two appeals are being considered in this proceeding. These arise out of the same order. The first appeal is by the Circle Office of Punjab National Bank at Ludhiana. The second appeal is by the Branch Office of the same bank at Ludhiana. The matter relates to the period 1 -4 -2008 to 31 -3 -2009 and involves tax amount of Rs. 2,05,60,426/ -. The appellant bank has been providing banking and financial service and paying service tax on such services. Till 31 -3 -2009 each branch of the appellant bank was registered for payment of service tax and was paying service tax for service rendered by each branch. From April 2009 they wanted to move to the system of paying service tax on centralised basis as per provisions of Rule 4(2) of the Service Tax Rules, 1994, by registering each Circle office of the branch for payment of service tax on services rendered by all the branches falling under each Circle and the Ludhiana Circle of the branch was granted registration with effect from 2 -4 -2009. After such registration of the Circle office, the Cenvat credits lying unutilized at each of the branches under the circle office were transferred to the Ludhiana circle office and the registration of the branches were surrendered.

(2.) The dispute in this case relates to input service for which Cenvat credit could have been taken by Ludhiana branch prior to 31 -3 -2009 but was not taken. This mistake of the branch was found out in their internal audit and later they filed revised returns for the periods April 2008 to March 2009, to take such credit and thereafter transferred such unutilized credit to the Circle office. The dispute is whether the credits so taken were properly taken by the Branch Office and whether the Circle office was eligible to take such credit and utilize it. Revenue was of the view that the Ludhiana branch could not have filed such revised returns and such credit taken is recoverable from the Ludhiana Branch Office. Further Revenue's case is that the Circle office could not have taken Cenvat credit on the basis of invoice issued by Ludhiana branch and therefore the credit taken by the Circle Office is to be recovered in the hands of the Circle office also. A Show Cause Notice issued based on such reasoning has been confirmed demanding service tax amount of Rs. 2,05,60,426/ - each from the Ludhiana Branch and from the Circle Office in respect of the same input services on which tax amount of Rs. 2,05,60,426/ - was paid by the service provider. Further there is penalty of Rs. 2,05,60,426/ - each imposed on the Branch and the Circle Office.

(3.) AFTER hearing both sides what we find is that there is no dispute about the fact that the service tax in question was provided by the service provider to the appellant, and that the service was an input service for the appellant. If the Ludhiana Branch had taken credit before surrendering the license of the branch the branch would have been eligible for taking the disputed credit. There is no time limit on taking of credit with reference to the point of time of the payment of the bill received from service provider claiming reimbursement of service tax. There is no allegation that credit for the same payment has been utilized at two different offices of the appellant. The two appellants involved are two different offices of the same legal entity. There have been decisions of the Tribunal to the effect that where invoice was addressed to one office of a company and credit was taken by another office, that fact by itself is not a reason to deny credit on such tax paid. Thus no case of real revenue loss is made out but some procedural infractions are alleged, that too in a situation of changing from a system of payment of service tax by every branch to a system of paying tax by the Circle office for all branches falling under the circle. The main allegation was that revised return for one of the return periods involved was filed beyond the time limit prescribed in the Rules. But there is a question whether there was any need to file revised return at all for taking credit of service tax paid by the branch in the books maintained by the Circle office. The question whether such procedural infractions can lead to denial of the credit and any penalty should be imposed can be examined at the time of final hearing. We are of the view that asking for pre -deposit in this case involving no real loss to Revenue will cause serious prejudice to the interest of the appellants. So we grant waiver of pre -deposit of dues arising from the impugned order and stay collection of such dues during the pendency of the appeal.