2016 (7) TMI 1034 - AT - Service Tax

Cenvat credit - input services where service tax was paid under reverse charge - Goods Transport Services (GTA) and Business Auxiliary Services (BAS) - service tax liabilities on these two services have been discharged by them by debiting the cenvat credit account and not by cash - Another dispute relating is to credit taken on the basis of two invoices on input services and capital goods which were also denied on the ground that the invoices are not in the appellant s name but in the name of their sister unit. - Held that - no justification for denial of such credits on the ground that the service tax has been paid by using the debit account as unjustified. Accordingly, the impugned order is set aside with reference to such denial. Regarding the credit taken on invoices not in the name of appellant, the admitted facts are that the immediately on being pointed out by the Audit, the appellants reversed the credit on both the invoices and reported compliance. They have pleaded bonafide mistake and also on the fact that the sister unit did not avail any credit on the said invoices. - no justification for imposing equal penalty with reference to such reversals. Decided in favor of assessee.

Summary

Issues:
1. Dispute over availing cenvat credit on service tax for Goods Transport Services (GTA) and Business Auxiliary Services (BAS).
2. Dispute regarding credit taken on invoices not in the appellant's name.

Analysis:
1. The appeal challenged the Commissioner (Appeals)'s decision upholding the demand to recover service tax credit of &8377; 41,00,765/- availed by the appellants during the financial years 2005-06 and 2006-07 for GTA and BAS. The appellants discharged the service tax liability by debiting the cenvat credit account instead of cash payment. The Original Authority confirmed the demand with a penalty, which was upheld by the Commissioner (Appeals). The appellant argued that pre-amendment of Rule 2(p) of Cenvat Credit Rules, 2004 allowed service tax liability to be discharged using cenvat account, citing various Tribunal and High Court precedents. The Tribunal found the utilization of cenvat credit for service tax payment on reverse charge basis legal based on precedents and set aside the denial of credits.

2. The dispute over credit taken on invoices not in the appellant's name involved an amount of Rs.1,27,823/- and &8377; 6,930/- for "input services" and "capital goods." The appellant contended that they had reversed the credits upon audit pointing out the error, claiming it was a bonafide mistake and the sister unit did not use the credit. The Tribunal found the penalty imposed for this issue unjustified, noting that the show cause notice was issued beyond the normal time limit without proper justification. Consequently, the penalty was set aside, and the appeal was disposed of accordingly.

This judgment clarifies the eligibility of cenvat credit for service tax payment on reverse charge basis and emphasizes the importance of bonafide mistakes in credit transactions. The Tribunal's decision aligned with established legal precedents and highlighted the necessity of timely and justified penalty imposition.