2013 (2) TMI 384 - HC - Service Tax

Demand of service tax and Penalty - Correction in the order of Tribunal - CESTAT set aside the demand of tax as barred by limitation - assessee had paid the requisite amount of service tax before the show cause notice was issued - revenue contested that only challenge against the order of adjudication was in respect of demand of interest and penalties therefore, only such amount could be set aside & not tax - Held that - No substantial question of law arises as it is an inadvertent mistake in the order passed by the Tribunal as by mistake the word tax has been used in the impugned order, whereas it should have been interest which has led Revenue to frame the said question. The order of the Tribunal shall be read as the setting aside of interest and penalty alone. Admissibility of Cenvat Credit of tax paid on input services used in providing exempted output services - Held that - As the extended period of limitation was not available so as to contend that the credit of inputs service tax is not admissible to the assessee. Once the proceedings have been initiated after the expiry of one year, then the benefit of input credit could not be denied to the assessee - appeal in favour of assessee.

Summary

Issues:
1. Whether the demand of service tax was rightly set aside by the Tribunal?
2. Whether Cenvat Credit of tax paid on input services used in providing exempted output services was admissible?

Analysis:
Issue 1: The appellant, engaged in providing services, received a show cause notice for non-payment of service tax but deposited the amount before receiving the notice. The Commissioner confirmed interest and penalty on delayed payment. The Tribunal set aside the interest and penalty, mistakenly mentioning "tax" instead of "interest." The High Court clarified that only interest and penalty were challenged, not the tax. The Court held that no substantial question of law arose as the Tribunal's order was for setting aside interest and penalty alone, not the tax.

Issue 2: The demand notice for Cenvat Credit was served after a year without any fraud or suppression. The assessing authority and Tribunal found no reason to deny the input credit to the assessee. As the proceedings were initiated after the limitation period, the benefit of input credit could not be withheld. The Court concluded that no substantial question of law arose regarding the admissibility of Cenvat Credit. The appeal was dismissed, affirming the Tribunal's decision.