2018 (2) TMI 933 - AT - Service Tax

Penalty - wrongly availed CENVAT credit, reversed alongwith interest as soon as pointed out - Held that - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX Versus M/s ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD 2011 (9) TMI 114 - KARNATAKA HIGH COURT , where it was held that The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid. Keeping in view the conduct of the appellant, it is a fit case for invoking provisions of Section 80 of the Finance Act, 1994 for waiving the penalty which is imposed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Wrongly availed CENVAT credit
- Imposition of penalty

Analysis:
The appellant, engaged in online information and data services, renting of immovable property services, and registered as an Input Service Distributor, filed appeals against two orders dated 28/11/2014 and 30/03/2015. The Department found that the appellant had wrongly availed CENVAT credit twice based on the same document during an audit. Upon detection, the appellant reversed the wrongly availed credit with interest. Subsequently, the Department issued show-cause notices, upholding the service tax paid with interest and imposing penalties under CENVAT Credit Rules and the Finance Act, 1994. The appellant contested the penalties, arguing lack of willful intent and citing relevant case laws. The Department justified the penalties, emphasizing that the reversal was prompted by audit detection. After hearing both parties, the Tribunal noted the undisputed reversal of CENVAT credit by the appellant but questioned the imposition of penalties. The appellant's intent to evade tax was challenged, highlighting entitlement to credit upon payment. Citing a High Court case, the Tribunal criticized authorities for penalizing prompt taxpayers and invoked Section 80 of the Finance Act to waive penalties due to the appellant's conduct. Consequently, the Tribunal modified the order, sustaining the tax demand with interest but setting aside the imposed penalties. The appeals were partially allowed, and the impugned orders were modified accordingly.