2013 (5) TMI 84 - AT - Service Tax

Unauthorized Cenvat Credits - Allegations of no documents as specified in Rule 9(1) of Cenvat Credit Rules, 2004 submitted - confirmation of tax demand along with interest& penalty equal to this amount - Held that - As per the importance of insisting on a document prescribed under Rule 9(1) of the Cenvat Credit Rules, 2004 for allowing credit if invoices were being issued by IAL the above issues would have got settled in the normal course. If IAL did not want to follow the procedure of issuing invoices for impugned services rendered by them and showing the service tax payable, IAL is only ducking the above queries which are fundamental for levying service tax on the impugned activity and in allowing Cenvat credit as claimed by appellant. Photocopies of receipts issued by IAL for payment towards service tax paid by the appellant does not show the assessable value of the services or its classification. It is not a case of just ascertaining whether the tax amount has been deposited in the treasury by looking at the bank statements and then allowing credit to any person who stakes claim for credit of the tax so deposited. Thus in view of the provisions in Rule 9(1) of Cenvat Credit Rules, 2004, the appellant is not entitled to the credit in question. Whether extended period of time can be invoked for demanding the credits improperly taken - Held that - This is not a case of bona fide mistake. It is an attempt to avoid basic issues relevant for levy of service tax and taking of credit - the arguments are not maintainable as credits are availed without disclosing to Revenue that the credits are being taken though the Rules are not complied with - extended period of time can be invoked in such cases for demanding credits taken. Consequently the penalty imposed is also maintainable. Against assessee.

Summary

Issues:
1. Whether the appellant's activity of buying and selling cargo space constitutes a taxable service under the category of "Business Auxiliary Service" for which service tax was paid.
2. Whether the appellant's Cenvat credit of service tax paid to Indian Airlines Limited (IAL) without the specified documents under Rule 9(1) of Cenvat Credit Rules, 2004 is valid.
3. Whether the extended period of time can be invoked for demanding improperly taken credits and imposing penalties.

Issue 1: Taxability of Appellant's Activity:
The appellant engaged in buying and selling cargo space, claiming it did not involve a taxable service as no service was rendered. The argument was supported by legal precedents. However, the Revenue contended that the appellant accepted the service was taxable by paying service tax. The issue raised was whether the activity fell under "Business Auxiliary Service" and if the tax liability could be disputed retrospectively.

Issue 2: Validity of Cenvat Credit:
The appellant took Cenvat credit of service tax paid to IAL without the specified documents under Rule 9(1) of Cenvat Credit Rules, 2004. The appellant provided documents like photocopies of receipts, certificates from IAL and the bank, relying on the proviso to Rule 9(2) for allowing credit. The Revenue argued that the documents did not comply with the rules, questioning the validity of the credit.

Issue 3: Extended Period and Penalties:
The Tribunal considered whether the extended period could be invoked for demanding improperly taken credits and imposing penalties. It was concluded that the appellant's actions were not a bona fide mistake but an attempt to avoid tax liability. The Tribunal found the arguments for non-compliance with the rules to be unjustified and upheld the imposition of penalties and the rejection of the appeal.

The Tribunal held that the appellant's activity did constitute a taxable service under "Business Auxiliary Service" for which service tax was paid. However, the Cenvat credit taken without the specified documents under Rule 9(1) was deemed invalid. The Tribunal also ruled that the extended period could be invoked for demanding improperly taken credits and imposing penalties due to the appellant's actions. Ultimately, the appeal was rejected, and the penalty was upheld.