2014 (9) TMI 78 - AT - Service Tax

Waiver of pre-deposit of service tax - scientific and technical consultancy service - option as provided under rule 6 (3) (ii) of the Cenvat Credit Rules not filed - Held that - Applicants were reversing proportionate credit which is in respect of non taxable service as per the provisions of Rule 6 (3) (ii) of the Cenvat Credit Rules in view of the earlier adjudication order dated 31.3.2011. The applicant has made out a case for waiver of pre-deposit of the dues. In the facts and circumstances of this case, the pre-deposit of the dues is waived and recovery thereof stayed for hearing of the appeals - Stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, interest, and penalties based on the provisions of Rule 6 of the Cenvat Credit Rules.

Analysis:
The applicants filed applications seeking waiver of pre-deposit of service tax, interest, and penalties amounting to Rs. 94,23,398. The demand was confirmed on the grounds that the applicants provided both taxable services like scientific and technical consultancy and non-taxable services like education. The Revenue alleged that the applicants availed credit for common input services used in providing both types of services. The applicants argued that they followed the procedure prescribed under Rule 6 (3) of the Cenvat Credit Rules for reversing proportionate credit in their statutory returns, as per a previous adjudication order. They contended that the denial of benefits under Rule 6 (3) (ii) and Rule 6 (5) was unjustified, making the demand unsustainable.

The Revenue, however, maintained that the applicants failed to file the necessary declaration under Rule 6 (3A) of the Cenvat Credit Rules after benefiting from Rule 6 (3) (ii) in an earlier case. They argued that the demand was rightly made based on the applicants' non-compliance with the rules. The Tribunal observed that the applicants had indeed reversed proportionate credit for non-taxable services in line with the previous adjudication order. Considering the circumstances, the Tribunal found merit in the applicants' case for waiver of pre-deposit. Consequently, the pre-deposit of dues was waived, and recovery stayed pending the appeal hearings.

In conclusion, the Tribunal allowed the stay petitions, granting the applicants relief from pre-deposit obligations pending the resolution of their appeals.