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2008 (2) TMI 376 - AT - Service TaxPremature availment of service tax credit in one month earlier - appellants submits that this was a procedural lapse on the part of the appellant in availing advance service tax credit prior to the payment of service tax of input service availed by them but ultimate credit is available to them in the next month since appellant is ready to pay interest for the intervening period entire credit cannot be denied to them and penalty is not imposable on them
Issues:
Availment of service tax credit one month earlier under the proviso to Rule 3(1) of Service Tax Credit Rules, 2002. Analysis: The judgment deals with the issue of availing service tax credit one month prior to the payment of service tax on the input service, which led to the Department issuing show cause notices disallowing the credit and proposing a penalty. The Rule 3(1) of the Service Tax Credit Rules, 2002, specifies the conditions under which service tax credit can be availed by an output service provider. The appellant admitted to availing the credit prematurely but argued that the credit was ultimately available to them in the next month, and they were willing to pay interest for the intervening period. The learned Advocate representing the appellants contended that the premature availing of the credit was a procedural lapse and that the entire credit should not be denied as it was utilized by the appellant in the subsequent period. The Member (J) agreed with this contention, acknowledging that the credit was indeed availed prematurely but was available during the following period. It was determined that interest in accordance with the law needed to be paid for the intervening period. The judgment took a lenient view, concluding that it was not a suitable case for the imposition of a penalty. Therefore, the judgment set aside the denial of credit and the imposition of a penalty. It confirmed that interest as per the law should be paid. The appeals were disposed of accordingly, with the pronouncement made in the open Court on 28-2-2008.
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