2011 (4) TMI 1111 - AT - Service Tax

Cenvat credit - relief under Section 80 of the Finance Act, 1994 - Counsel submits that the service tax paid on club membership subscriptions, catering services, business auxiliary services, GTA, Dasara Mandap, gift vouchers, library membership, etc., shall be admissible for adjustment against the excise duty liability or service tax liability Held that - Mere pleading without evidence does not get sanction of statutory provisions to grant relief to the appellants. Therefore, the appellant is liable to service tax for wrongful availment of the Cenvat Credit, appellant can only get concession in if it comes forward to pay the entire dues to the department within the stipulated time envisaged by law. For such purpose the authorities should grant an opportunity to the appellant to enable it to comply with the law within the stipulated period. If the appellant so complies within the stipulated period, the penalty shall be reduced to 25% of the service tax demand, appeal is thus partly allowed

Summary

Issues:
1. Admissibility of service tax paid on various services for adjustment against excise duty or service tax liability.
2. Connection of Cenvat credit claimed by assessee to the activities.
3. Levy of penalty under Section 80 of the Finance Act, 1994.

Analysis:
1. The counsel argued that service tax paid on club memberships, catering services, business auxiliary services, etc., should be allowed for adjustment against excise duty or service tax liability as these services are essential for the industry. However, the appellate authority found no evidence connecting the claimed Cenvat credit to the appellants' activities. Without proof that these expenses were necessary for carrying out business activities, relief could not be granted. Mere pleading without evidence does not warrant relief, leading to the confirmation of service tax liability for wrongful Cenvat credit availment.

2. The appellate authority emphasized the lack of evidence establishing the connection between the claimed Cenvat credit and the appellants' activities. Without proof that these expenses were essential for conducting business activities, relief could not be granted. The appellant's failure to satisfy the authority with evidence resulted in the confirmation of service tax liability for the improper availment of Cenvat credit. Consequently, interest was confirmed as a consequential aspect of the levy.

3. Regarding the levy of penalty, the appellant contended that being a new subject to the industry, relief should be granted under Section 80 of the Finance Act, 1994. However, since the Finance Act had been in force for nearly two decades, taxpayers were expected to be aware of its provisions. The appellant could only receive a concession by paying the entire dues within the stipulated time. Following the ratio laid down by the Hon'ble High Court of Delhi, the penalty could be reduced to 25% of the service tax demand if the appellant complied within the specified period. Ultimately, the tax demand was confirmed, interest became payable, and the penalty was reduced to 25% subject to compliance, resulting in the partial allowance of the appeal.