2012 (11) TMI 369 - AT - Service Tax

Cenvat Credit - Waiver of Pre-deosit of Duty - Appellant bank has been providing banking and financial service and paying service tax on such services - The appeellant contended that revised return for one of the return periods involved was filed beyond the time-limit prescribed in the Rules but 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 it causes no loss to Revenue. Held that - Waiver of pre-deposit of dues arising from the impugned order and stay collection of such dues during the pendency of the appeal - in favour of appellant.

Summary

Issues: Stay petitions in two appeals involving service tax payment and credit transfer from branch offices to Circle office.

Analysis:
1. Service Tax Payment and Credit Transfer: The case involves two appeals arising from the same order related to service tax payment and credit transfer within a bank's branches. The bank initially paid service tax at each branch level but later decided to centralize the payment by registering the Circle office for all branches. The dispute arose when the Ludhiana branch failed to claim Cenvat credit on input services before surrendering its license. The Revenue contended that the branch's revised returns were invalid, demanding recovery of service tax and imposing penalties on both the Ludhiana Branch and the Circle Office.

2. Dispute Resolution: The Tribunal found that the service was provided to the bank and qualified as an input service. It noted that if the Ludhiana Branch had claimed credit before surrendering its license, it would have been eligible for the disputed credit. The Tribunal emphasized that there was no time limit for claiming credit concerning the payment of bills from service providers. Moreover, it highlighted that both the Ludhiana Branch and the Circle Office were part of the same legal entity, and previous Tribunal decisions supported the transfer of credit between different offices of a company.

3. Procedural Infractions and Penalty: The main contention was the alleged procedural infractions regarding the filing of revised returns beyond the prescribed time limit. The Tribunal questioned the necessity of filing revised returns for transferring service tax credit to the Circle office. It opined that procedural errors should not lead to credit denial or penalty imposition, especially considering the transition from branch-level tax payment to centralized payment by the Circle office. The Tribunal granted a waiver of pre-deposit and stayed the collection of dues during the appeal, citing no actual revenue loss and potential prejudice to the appellants' interests.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing the eligibility of the Ludhiana Branch for the disputed credit and the procedural nature of the alleged infractions. The decision highlighted the importance of considering the specific circumstances of transitioning tax payment systems within a corporate entity and the need to prevent undue financial burden on the appellants during the appeal process.