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2018 (9) TMI 1516 - AT - Service TaxCENVAT Credit - time limit for taking credit - whether the Cenvat Credit of ₹ 1,84,47,149/- has been rightly disallowed under Rule 14 of CCR, 2004 and further the tax of ₹ 61,997/- have been erroneously demanded which has been a clerical error in the presentation of the amounts by the appellant? - whether the penalties imposed under Sections 70, 77 and 78 of the Finance Act and Rule 15(3) of CCR have been rightly imposed? Held that - There was no time limit prescribed in the Cenvat Credit Rules for taking credit. The time limit of 6 months was introduced w.e.f. 01.09.2014 which has got perspective effect as held by Hon ble Allahabad High Court in CCE vs. Ram Swarup Electricals Ltd. 2007 (5) TMI 116 - HIGH COURT , ALLAHABAD . It cannot be applied to the period prior to 01.09.2014 - disallowance of Cenvat Credit is set aside. Demand of differential tax of ₹ 61,997/- - for the financial year 2011-12 the gross receipt is computed as ₹ 5,51,73,149/- which comprises of signal fee ₹ 3,77,39,469/- but in the SCN it has been erroneously taken at 3,83,39,469/- thus there has been a difference of ₹ 6 lacs - Held that - Te said clerical mistake in final account was noticed by appellants subsequently. Appreciating the mistake as same is evident from the record and books of account maintained on ordinary course of business, demand of difference amount is set aside. Penalty u/s 77 - Held that - There is no deliberate defiance of the provision of law nor there is any act of suppression on the part of the appellant and the transaction was recorded in the books of accounts ordinarily maintained in the course of business, penalties under Sections 77(1)(b), 77(1)(c)(i), 77(1)(c)(iii), 77(2) and Rule 15(3) of CCR, 2004 is set aside. Penalty u/s 70 - Held that - Penalty of ₹ 1,80,000/- under Section 70 is retained however it reduced to ₹ 14,400/- in terms of Section 70 and Rule 7C of Finance Act, 1994. Appeal allowed in part.
Issues:
1. Disallowance of Cenvat Credit under Rule 14 of CCR, 2004 2. Erroneous demand of tax 3. Imposition of penalties under Sections 70, 77, and 78 of the Finance Act and Rule 15(3) of CCR Analysis: Issue 1: Disallowance of Cenvat Credit under Rule 14 of CCR, 2004 The Appellants were engaged in providing cable operator services and space selling for advertisements. The Show Cause Notice (SCN) proposed a demand of service tax for an extended period from 2010-11 to 2013-14, disallowing Cenvat Credit on input services. The adjudication confirmed the proposed demand and disallowed the Cenvat Credit, imposing penalties under various sections. The Appellants contended that they were eligible for credit supported by cenvatable invoices and that the credit was claimed within the respective period, even though the returns were filed late. The Tribunal found that the time limit for taking credit was introduced later and could not be applied retrospectively. Relying on previous decisions, the Tribunal set aside the disallowance of Cenvat Credit, allowing the whole credit to the Appellant. Issue 2: Erroneous Demand of Tax The Commissioner confirmed a demand, which the Appellants contested, stating their liability was lower due to a clerical error in the amount presented. The gross amount of revenue for a specific year was incorrectly computed in the show cause notice, leading to a difference in the tax amount demanded. The Tribunal acknowledged the mistake as evident from the records and set aside the demand for the differential amount, noting no deliberate defiance of the law or suppression by the Appellant. Issue 3: Imposition of Penalties The Tribunal set aside the penalties imposed under Sections 77(1)(b), 77(1)(c)(i), 77(1)(c)(iii), 77(2), and Rule 15(3) of CCR, 2004, considering no deliberate violation or suppression by the Appellant. However, a penalty under Section 70 was retained but reduced in accordance with the relevant provisions. The Tribunal granted consequential relief to the Appellant. In conclusion, the Tribunal allowed the Cenvat Credit, corrected the erroneous tax demand due to a clerical error, and set aside most penalties imposed, providing relief to the Appellant in this case.
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