2016 (7) TMI 1177 - AT - Service Tax

Levy of penalty - It was contended that on merits Appellant had a good case, but to buy peace this issue was not agitated on merits and amount along with interest was paid. - issues pertaining to eligibility of Cenvat Credit - duty paying documents - invoices in the name of head office - Held that - So far as non-imposition of penalty for credits taken with respect to telephonic services and certain improper documents in the name of head office it is observed that Appellant is not contesting those issues and have paid these amounts. Penalties imposed under Section 78 of the Finance Act, 1994 is required to be set aside as there are conflicting case laws on these issues. - No penalty - Decided in favor of assessee.

Summary

Issues:
1. Disallowance of Cenvat Credit and imposition of penalty by Adjudicating Authority.
2. Contesting the imposition of penalty under Section 78 of the Finance Act, 1994.
3. Validity of Cenvat Credit for specific amounts related to service tax and telephonic services.

Analysis:
1. The Appellant contested the disallowance of Cenvat Credit amounting to ?7,12,626 by the Adjudicating Authority. The Appellant argued that a portion of the disallowed credit was related to service tax, where bills were unsettled, and the Appellant chose not to contest this issue on merits, paying the amount along with interest. The Appellant claimed a bonafide belief in the admissibility of the Cenvat Credit under Section 80 of the Finance Act, 1994. The Appellate Tribunal found merit in the Appellant's argument and waived the penalty imposed under Section 78 for this portion of the credit.

2. Regarding a specific credit of ?3,01,692, the Revenue contended that the documents did not provide a complete address, only mentioning "141 India." However, the Appellant demonstrated that the address was detailed in the contract with the service provider, indicating the validity of the credit. The Tribunal observed that the credit was correctly availed based on proper duty paying documents and set aside the Order-in-Appeal to that extent.

3. The remaining credit involved telephonic services used by the Directors of the Appellant and payments made for branch offices by the headquarters. The Appellant did not contest these amounts but argued against the imposition of penalties due to conflicting case laws on the issue. The Tribunal agreed with the Appellant, setting aside the penalties imposed under Section 78 for these specific credits.

In conclusion, the Appellant's appeal was allowed concerning the validity of the Cenvat Credits. The Tribunal ruled in favor of the Appellant on the issues where proper documentation and bonafide belief were established, setting aside penalties and disallowances accordingly.