2013 (11) TMI 708 - AT - Service Tax

Stay application - input service distributor (ISD) - Interest and penalty imposed for procedural errors and committed by the appellant while availing the cenvat credit and debiting the amount of Education Cess and Secondary & Higher Education Cess - Held that - Revenue s case is that service tax credit which has been distributed by the head office as an ISD, are the services which are not received by the current appellant herein which is the Silvassa factory. It is also recorded that the service tax credit which has been distributed is in respect of some other factory. In this case, the appellant has reversed the cenvat credit so availed by him and had not contested the issue before the lower authorities. At the same time, it is the claim of the counsel that they are eligible to avail the cenvat credit on such invoices issued by the ISD. Appellant had shown the debits of the amounts in the year 2006 and 2008 and when there was no balance in the Education Cess and Secondary & Higher Education Cess account. The same was made good by the appellant in the year 2010 on being pointed out by the audit party. In my view, prima facie, the appellant is liable to pay interest on such amount, which they were supposed to debit and pay to the government - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues involved:
- Stay petitions for waiver of pre-deposit of interest and penalties related to cenvat credit and debiting Education Cess and Secondary & Higher Education Cess.

Analysis:
- The issue in the stay petitions revolves around two main points. Firstly, the appellant's claim for cenvat credit based on invoices issued by their head office as an Input Service Distributor (ISD). The Revenue argues that the services for which the credit was distributed were not received by the appellant's factory. However, the appellant contends they are eligible for the credit. The judge finds that the appellant cannot be faulted for availing the credit distributed by the ISD, as the procedure aims to prevent mis-utilization of credit. The judge rules in favor of the appellant, stating that they have a case for waiver of pre-deposit concerning the disallowed cenvat credit from head office invoices.

- Secondly, the interest and penalty related to the overdrawn amounts of Education Cess and Secondary & Higher Education Cess are considered. The appellant debited these amounts in 2006 and 2008 without a balance, rectifying the situation in 2010 upon audit party notification. The judge determines that the appellant is liable for interest on the overdue amount. The appellant's argument of having sufficient balance in the excise duty account is not accepted for avoiding interest and penalty. The judge directs the appellant to deposit a specified amount within eight weeks for the interest involved, with further compliance and reporting requirements. The waiver of pre-deposit for the remaining amounts is allowed, pending compliance and until the appeal's final disposal.

- All three stay petitions are disposed of according to the outlined decisions, with the judge's pronouncement in court.