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2015 (6) TMI 626 - AT - Service TaxDenial of the benefit of abatement Notification No.1/2006-ST, dated 01.03.2006 - Availment of CENVAT Credit - Held that - f the assessee has reversed the Cenvat credit availed along with interest, the same shall amount to non-availment of Cenvat credit. Consequently, the assessee is entitled for the benefit of exemption Notification No.1/2006-ST ibid. Admittedly, in this case the appellant has reversed the Cenvat credit of their own. On being realisation that they are not entitled to take the Cenvat credit if they are availing the benefit of exemption Notification No.1/2006-ST. Therefore, we hold that the reversal of Cenvat credit by the appellant amounts to non-availment of Cenvat credit. Consequently, appellant is entitled for the benefit of Notification No.1/2006-ST. In these terms the demand of service tax along with interest and equivalent amount of penalty are set aside on this issue. Appellant has paid the service tax through cheque on due dates and the same stand realised on a later date. Therefore, the date of deposited the cheque into the treasury is the date of payment of service tax as per Rule 6(2A) of the said Rules. In these circumstances, we hold that the appellant has paid the service tax in time. Consequently, demand of interest on delayed payments is not sustainable. - Decision in the case of Khyati Tours & Travels 2011 (6) TMI 324 - CESTAT, AHMEDABAD followed - Decided in favour of assessee.
Issues Involved:
1. Entitlement to the benefit of Notification No.1/2006-ST upon reversal of Cenvat credit. 2. Liability to pay interest for delayed payment of service tax as per Rule 6(2A) of Service Tax Rules, 1994. Issue-wise Detailed Analysis: 1. Entitlement to the Benefit of Notification No.1/2006-ST: The appellant, a tour operator, availed Cenvat credit on input services during the period of April 2006 to March 2007 while also claiming the benefit of Notification No.1/2006-ST. This notification provided an exemption from service tax but was not applicable if the assessee availed Cenvat credit on inputs or capital goods. Upon realizing the ineligibility to claim the notification's benefit while availing Cenvat credit, the appellant reversed the Cenvat credit along with interest and informed the department. Despite this, the Revenue issued Show Cause Notices to deny the benefit of the notification and demanded service tax along with interest and penalties. The Tribunal examined the case in light of the decision in *Chandrapur Magnet Wires (P) Ltd. vs. Collector of Central Excise, Nagpur* and the subsequent interpretation by the Hon'ble Allahabad High Court in *Hello Minerals Water (P) Ltd. vs. Union of India*. It was established that the reversal of Cenvat credit amounts to non-availment of credit, thereby entitling the appellant to the benefit of the notification. The Tribunal also referred to its own decision in *Khyati Tours & Travels vs. CCE, Ahmedabad*, which supported the appellant's claim. The Tribunal concluded that the appellant's reversal of Cenvat credit, upon realization of ineligibility, amounts to non-availment of the credit. Consequently, the appellant was entitled to the benefit of Notification No.1/2006-ST. The demand for service tax, interest, and penalties was set aside. 2. Liability to Pay Interest for Delayed Payment of Service Tax: The appellant contended that as per Rule 6(2A) of the Service Tax Rules, 1994, the date of presentation of the cheque for service tax payment should be deemed the date of payment, subject to the realization of the cheque. The appellant had deposited the service tax via cheque on the due dates, which was realized later. The Tribunal upheld this contention, stating that the date of cheque presentation is considered the date of service tax payment as per Rule 6(2A). Therefore, the appellant had paid the service tax on time, and the demand for interest on delayed payments was not sustainable. Conclusion: Both issues were resolved in favor of the appellant. The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The reversal of Cenvat credit was deemed equivalent to non-availment, thus entitling the appellant to the benefit of Notification No.1/2006-ST. Additionally, the appellant was not liable to pay interest for delayed service tax payments, as the payments were made on time per Rule 6(2A) of the Service Tax Rules, 1994.
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