2018 (11) TMI 1523 - AT - Service Tax

Renting of immovable property services - penalty - Held that - I do find that the appellant had intimated the lower authority regarding the discharge of service tax liability and the interest thereof on 17.09.2012. The appellants were correct in following the law and are eligible for the benefit of Section 80(2) of the Finance Act, 1994 - having discharge of service tax liability within time there was no reason to visit the appellant on any penalty. The penalty imposed on appellant is set aside. Demand of ineligible CENVAT credit - Held that - The submission of the Counsel seems to be acceptable these payments were made from the head office as a receiver of the services. In my view, the Adjudicating Authority should consider the plea of the appellant in its correct perspective and go through the documents and come to a conclusion as to the correctly availed the CENVAT credit - the matter is remitted back to the Adjudicating Authority to reconsider the issue afresh after following the principles of natural justice. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Demand of service tax on Renting of Immovable Property service
2. Denial of CENVAT credit on various input services

Analysis:

Issue 1: Demand of service tax on Renting of Immovable Property service
The appellant contested the demand of service tax and interest amounting to ?20,116 on Renting of Immovable Property service. The appellant argued that they had paid the tax and interest on 17.09.2012, complying with the provisions of Section 78 of the Finance Act, 1994. The appellant claimed that the penalty should be set aside as the payment was made within the specified time frame. The Tribunal agreed with the appellant, stating that the appellant correctly discharged the tax liability within the required time, making them eligible for the benefit under Section 80(2) of the Finance Act, 1994. Consequently, the penalty imposed on the appellant was set aside.

Issue 2: Denial of CENVAT credit on various input services
Regarding the denial of CENVAT credit of ?6,88,215 on input services such as Telephone charges, Mobile Charges, Advertisement, Vehicle Servicing, and others, the appellant argued that they had not availed more credit than due from the invoices. The Tribunal noted that the lower authorities did not adequately consider the submissions made by the appellant's counsel on the eligibility of availing CENVAT credit. The Tribunal found the submissions acceptable upon reviewing the documents provided, which indicated that payments were made from the head office as a receiver of services. The matter was remanded back to the Adjudicating Authority for a fresh assessment, instructing them to consider the appellant's plea and documents, ensuring the correct perspective on availing CENVAT credit. The appellant was granted the liberty to produce additional documents if needed.

In conclusion, the Tribunal partly allowed the appeal by setting aside the penalty on service tax liability and remanded the issue of CENVAT credit back to the Adjudicating Authority for a reevaluation, emphasizing the importance of following the principles of natural justice in reconsidering the matter.