2016 (3) TMI 202 - AT - Service Tax

Cenvat Credit - Exempted service - Appellant contended that it had not provided any exempted service and by mistake that ₹ 94,953/- was shown in the column meant for exempted service in ST-3 return and this mistake happened because the accountant thought that as this amount had not been received from the service recipient but when subsequently received the tax was paid - Held that In the absence of identification of the exempted service provided by the appellant and in the wake of the assertion of the appellant that it had not provided any exempted services during the relevant period, the demand cannot be sustained. - decided in favour of appellant

Summary

Issues:
1. Confirmation of Service Tax amount and recovery against the appellant.
2. Confirmation of demand of Service Tax against wrongly utilized Cenvat Credit and recovery.
3. Imposition of interest on delayed payments and recovery from the appellant.
4. Charging interest on unpaid Service Tax and wrongly utilized Cenvat Credit.
5. Imposition of penalty under Section 76 of the Finance Act, 1994.
6. Imposition of penalty under Section 77 of the Finance Act, 1994.
7. Refraining from imposing penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The order-in-appeal confirmed the Service Tax amount and recovery against the appellant. The appellant admitted the short payment and interest liability. However, regarding the demand of Service Tax against wrongly utilized Cenvat Credit, the appellant contended that the demand arose due to a mistake in showing an amount in the exempted service column, which was subsequently recovered and tax paid. The Revenue argued that the amount mentioned in the exempted service column indicated the provision of exempted service, justifying the recovery of Cenvat Credit. The Tribunal noted the lack of identification of the exempted service provided by the appellant and the failure of the Revenue to establish the provision of exempted service. Consequently, the demand for the Cenvat Credit amount was set aside.

2. The Tribunal upheld the Service Tax amount and interest demand, along with penalties under Sections 76 and 77. The penalty under Section 76 was capped at the Service Tax amount. The Tribunal emphasized that in the absence of evidence of providing exempted services and the appellant's assertion of non-provision of such services, the demand related to Cenvat Credit could not be sustained. Therefore, the demand for the Cenvat Credit amount was dismissed, while the Service Tax amount, interest, and penalties were upheld.