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2017 (5) TMI 627 - AT - Service TaxInterest - penalties - CENVAT credit - broadcasting service - The Department entertained a view that broadcasting service cannot be considered as an input service for the appellant - The assessee has withdrawn the contest with regard to irregularly availed credit to the tune of ₹ 18,77,641/-. Therefore the issue narrows down to the demand of interest and the penalties - Held that - the Commissioner(Appeals) has taken note of the fact that the credit has been reversed before utilisation. The learned counsel for the assessee has also produced copies of the ST3 returns to show that the credit has been reversed before utilisation during the disputed period - the Commissioner(Appeals) has rightly set aside the demand of interest. Penalties - Held that - The issue whether the appellant is eligible for credit on the broadcasting service prior to 01/05/2006 as well as after an interpretational issue - When the assessee has reversed the credit before utilisation, the judgment is in case of Bill Forge (P) Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT will apply and the interest and penalty are not sustainable - penalties set aside. Appeal dismissed - decided against Revenue.
Issues:
1. Irregular CENVAT credit taken on broadcasting service. 2. Liability of interest and penalties on the irregularly availed credit. Analysis: 1. The issue involved in the appeals was the irregular CENVAT credit taken on broadcasting service. The assessee, registered under advertising services, bought time slots from Prasar Bharti and sold them to various persons. The Department contended that broadcasting service could not be considered an input service for the appellant. A show-cause notice was issued for irregular availment of CENVAT credit, leading to a demand of ?18,77,641 along with interest and penalties. The original authority confirmed the demand, but the Commissioner(Appeals) upheld the service tax demand while setting aside the interest and penalties. The appeals were filed by both the assessee and the Department. 2. The learned counsel for the assessee acknowledged the liability of ?18,77,641 and withdrew the challenge. The Department appealed against the Commissioner(Appeals) order that set aside the interest and penalties. The counsel referenced the Commissioner's discussion, highlighting that the assessee had reversed the credit before utilization. Citing legal precedents like M/s. Ind-swift Laboratories Ltd. and CCE, Pondicherry Vs. Superfil Products, the Commissioner(Appeals) rightly set aside the demand of interest and invoked Section 80 to cancel the penalty. The issue of credit on broadcasting services was deemed interpretational, and the assessee's belief in availing the credit in good faith was emphasized. 3. The Department argued that since the assessee admitted the irregularly availed credit, they were liable for interest and penalties. However, the Commissioner(Appeals) had erred in setting aside these charges according to the Department. 4. The Commissioner(Appeals) upheld the lower authority's decision to disallow the credit taken before May 1, 2006, amounting to ?18,77,641. Regarding interest and penalties, the Commissioner noted that the credit remained unutilized for the period in question, aligning with judicial pronouncements that interest need not be paid when credit was wrongly taken but not used. Citing the judgment of the Hon'ble High court of Punjab and Haryana in the case of M/s. Ind-Swift Laboratories Ltd., it was clarified that interest should be payable only when wrongly utilized. The Commissioner rightly set aside the demand for interest and penalties, considering the reversal of credit before utilization. 5. The learned AR vehemently argued against the penalty imposition, emphasizing the interpretational nature of the issue regarding the eligibility for credit on broadcasting services. The Commissioner(Appeals) invoked Section 80 to set aside the penalty, given that the credit was reversed before utilization. The judgment in the case of Bill Forge (P) Ltd. was deemed applicable, leading to the dismissal of appeals filed by both the Department and the assessee.
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