2012 (12) TMI 905 - AT - Service Tax

Waiver of pre-deposit - Service Tax, interest and penalty thereon - Abatement - Notification No.1/2006 dated 1.3.2006 which provides 60% abatement for payment of Service Tax on the condition that the assessee shall have to availed the credit on duty paid goods and inputs according to Service Tax on inputs services used for providing such taxable services - Held that - Assessee had availed credit of Service Tax paid on input services, therefore, the applicant had not made out a case for total waiver of dues. Hence, the applicant is directed to deposit an amount of the credit availed. Partly allowed

Summary

Issues:
Waiver of pre-deposit of Service Tax, denial of benefit of Notification No.1/2006, availing credit on duty paid goods and inputs, sustainability of demand.

Analysis:
The appellant filed an application seeking waiver of pre-deposit of Service Tax amounting to Rs.17,24,449/- along with interest and penalty. The demand was confirmed after denying the benefit of Notification No.1/2006 dated 1.3.2006, which offers a 60% abatement for payment of Service Tax subject to certain conditions. The appellant had availed a credit of Rs.6,72,731/- in March 2006, but the benefit of the Notification was denied for that month. The appellant argued that the demand should be limited to the credit availed, which was approximately Rs.6,72,000/-. It was contended that the credit was taken for services received before 1.3.2006, as the duty paying documents were received after that date, and no credit was availed for services used after 1.3.2006. The Revenue, however, supported the findings of the lower authorities.

The Tribunal observed that since the appellant had indeed availed credit of Service Tax on input services, they had not established a case for a complete waiver of the dues demanded. Consequently, the Tribunal directed the appellant to deposit the amount of Rs.6,72,000/- (the credit availed) within eight weeks for the appeal hearing. Upon this deposit, the pre-deposit requirement for the remaining Service Tax, interest, and penalty would be waived, and the recovery thereof stayed during the pendency of the appeal. The appellant was instructed to report compliance by 15.11.2012.

In conclusion, the Tribunal found that the appellant's argument regarding the denial of the benefit of Notification No.1/2006 was not sustainable as they had availed credit on input services. Therefore, the Tribunal ordered a partial deposit of the amount availed as credit, leading to a waiver of the remaining pre-deposit amount for Service Tax, interest, and penalty during the appeal process.