2014 (10) TMI 519 - AT - Service Tax

Availment of CENVAT Credit - common services - payment of an amount @ 10% / 5% on the electricity sold by the appellant from their electricity generated in Tamil Nadu as per Rule 6 of the Cenvat Credit Rules, 2004 - Held that - During the course of the hearing and on perusal of the case records, it is observed by us that no where it is coming out as to which common services were availed by the appellant which were used both in the premises of the appellant as well as the electricity generating unit in Tamil Nadu. In the absence of any such co-relation, prima facie, Revenue has not been able to discharge burden that certain common services have been availed by the appellant and their electricity generating unit situated in Tamil Nadu. In view of the above observations and the case laws relied upon by the appellant, prima-facie, a case for complete waiver of the confirmed dues and penalties have been made out by the appellant - Stay granted.

Summary

Issues:
Stay application regarding demand confirmation, interest, and penalties under the Finance Act, 1994 based on Cenvat Credit Rules, 2004.

Analysis:
The appellant filed a stay application against the order confirming a demand of Rs. 72,18,957/- along with interest and penalties under the Finance Act, 1994. The appellant's argument was that demands were issued based on amounts received in the balance sheet related to electricity generation, but services like Terminal Charges, Stevedoring Services, and Telephone Services were not used for the electricity generating unit in Tamil Nadu. The burden of proof was placed on the Revenue to show the relatability of service tax credit to electricity generation, citing relevant case laws. On the other hand, the Revenue contended that the appellant had to reverse proportionate service tax credit due to electricity energy being exempted goods. The Tribunal observed that there was no clear indication of common services used by the appellant for both premises, leading to the Revenue failing to establish the necessary connection. Consequently, the Tribunal found a prima facie case for complete waiver of confirmed dues and penalties, ordering a stay on recoveries until the appeal's disposal.

This judgment highlights the importance of establishing a direct link between services availed and the specific activities they are used for, especially in cases involving tax credits under the Cenvat Credit Rules, 2004. The burden of proof lies with the Revenue to demonstrate the relatability of service tax credit to the relevant activities, failing which the appellant may succeed in seeking a waiver of confirmed dues and penalties. The decision emphasizes the need for clear evidence and documentation to support claims and defend against tax liabilities, ensuring a fair and just adjudication process.