2018 (2) TMI 19 - AT - Service Tax

CENVAT credit - allegation of the department is that M/s. BVIHR indulged in evasion of service tax by not paying the service tax to the department but issuing fake invoices to their customers - Held that - there is no iota of evidence to show that the respondent is involved in any fraudulent availment of credit. In fact, the respondent had availed credit on the invoices distributed by their Head Office, M/s.Bata, Gurgaon - without seizure there can be no confiscation of the goods and when the goods are not confiscated, the penalty imposed cannot be justified - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Admissibility of cenvat credit on invoices issued by Input Service Distributor.
2. Allegation of evasion of service tax through fraudulent invoices.
3. Imposition of penalty without duty demand in Show Cause Notice.

Detailed Analysis:
1. The case involves the admissibility of cenvat credit on invoices issued by an Input Service Distributor (ISD). The department alleged that the respondent availed credit on fraudulent invoices issued by M/s. BVIHR, involving evasion of service tax. The Commissioner (Appeals) set aside the penalty imposed by the original authority. The Tribunal analyzed the issue and found that there was no evidence to establish the respondent's involvement in fraudulent credit availment. The Tribunal highlighted that the invoices issued by ISD, M/s. Bata Gurgaon, were not proven to be fraudulent or invalid for cenvat credit. Consequently, the Tribunal upheld the Commissioner's decision, stating that the respondent availed credit on proper documents under the relevant provisions.

2. The allegation of evasion of service tax through fraudulent invoices was a key issue in the case. The department contended that M/s. BVIHR issued fake invoices, leading to wrongful credit availed by the respondent. However, the Tribunal noted that there was no evidence linking the respondent to the issuance of fraudulent invoices. The Commissioner (Appeals) also highlighted the absence of duty demand in the Show Cause Notice, indicating a lack of legal basis for imposing penalties. Ultimately, the Tribunal dismissed the appeal, emphasizing that without evidence of fraudulent credit availment by the respondent, the penalty could not be justified.

3. Another crucial issue was the imposition of penalty without a duty demand in the Show Cause Notice. The Commissioner (Appeals) observed that without seizure and confiscation of goods, justifying the penalty becomes challenging. Since there was no duty demand mentioned in the Show Cause Notice, the Tribunal found no grounds to interfere with the Commissioner's decision to set aside the penalty. Consequently, the Tribunal dismissed the appeal, emphasizing the lack of legal basis for the penalty in the absence of duty demand.

In conclusion, the Tribunal's judgment focused on the lack of evidence linking the respondent to fraudulent credit availment, the admissibility of cenvat credit based on proper documents, and the necessity of duty demand for justifying penalties. The decision upheld the Commissioner's ruling and dismissed the appeal, emphasizing the importance of legal basis and evidence in tax-related matters.