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2014 (7) TMI 849 - AT - Service TaxReversal of wrongly taken credit done - whether interest is chargeable from the date when it was taken upto the date of its reversal - CENVAT Credit taken on dumpers - Held that - Cenvat Credit was reversed before utilization is not in dispute - Interest is compensatory in character, and is imposed on an assessee, who has withheld payment of any tax, as and when it is due and payable. The levy of interest is on the actual amount which is withheld and the extent of delay in paying tax on the due date. If there is no liability to pay tax, there is no liability to pay interest. Section 11AB of the Act is attracted only on delayed payment of duty i.e., where only duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person liable to pay duty, shall in addition to the duty is liable to pay interest. Section do not stipulate interest is payable from the date of book entry, showing entitlement of Cenvat credit. Interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is taken or utilized wrongly - Following decision of Commissioner of Central Excise & ST, LTU Bangalore Vs. Bill Forge Pvt. Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT and U.O.I. Vs. Indo Swift Laboratories 2011 (2) TMI 6 - Supreme Court - Decided in favour of assessee. Valuation - Inclusion of Value of free supplies of diesel - Held that - As regards the demand of Service Tax on the value of the free supplies of diesel is concerned, the Larger Bench of this Tribunal in the case of M/s. Bhayana Builders Pvt. Ltd. Vs. Commissioner Service Tax, Delhi 2013 (9) TMI 294 - CESTAT NEW DELHI has held that the value of free supplies is not includible in the gross consideration received by the Service provider for rendition of taxable service. Consequently the demand of ₹ 78,17,056/- relating to free supplies of diesel is not sustainable. - Decided in favour of assessee.
Issues:
1. Demand of Service Tax on value of free supplies of diesel 2. Disallowed Cenvat credit taken on dumpers 3. Imposition of penalty under various sections Issue 1: Demand of Service Tax on value of free supplies of diesel The appeal was filed against an Order-In-Original confirming a demand for the value of diesel supplied by the service recipient, which was not included in the assessable value. The Appellants contended that free supplies by the service receiver should not be included in the gross amount charged by the service provider. The Tribunal referred to a previous judgment by the Larger Bench of CESTAT, which held that the value of free supplies should not be included in the gross consideration received by the service provider. Consequently, the demand related to free supplies of diesel was deemed unsustainable. Issue 2: Disallowed Cenvat credit taken on dumpers The Order-In-Original disallowed Cenvat credit taken on dumpers and imposed a penalty under relevant sections. The Appellants argued that they had reversed the credit before utilization and therefore no interest should be charged. The Tribunal considered the argument and referred to various legal precedents cited by both parties. The Tribunal analyzed the issue of charging interest on wrongly taken Cenvat credit and discussed judgments from the Hon'ble Supreme Court and the Hon'ble Karnataka High Court. Ultimately, the Tribunal held that interest is not chargeable on the wrongly taken Cenvat Credit that was reversed before utilization. Issue 3: Imposition of penalty under various sections The Order-In-Original also imposed a significant penalty under different sections of the law. The Tribunal's decision on the first two issues led to the conclusion that the penalty imposed was related to those specific matters. Since the Tribunal allowed the appeal on the primary issues of demand related to free supplies of diesel and disallowed Cenvat credit, the consequential penalty relating to those issues was also set aside. In summary, the Tribunal allowed the appeal filed by the Appellants against the Order-In-Original, primarily focusing on the unsustainable demand of Service Tax on free supplies of diesel and the disallowed Cenvat credit taken on dumpers. The Tribunal's detailed analysis of legal precedents and principles led to the decision that interest was not chargeable on the wrongly taken Cenvat credit that was reversed before utilization. Consequently, the penalty imposed in connection with these issues was also set aside.
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