2018 (12) TMI 858 - AT - Service Tax

Non-imposition of penalty and Interest - CENVAT Credit - denial on the ground that the input services on which Cenvat credits have availed do not qualify for the same, under Rule 2 of Cenvat Credit Rules - Held that - The appellant had been continuously informing the department about their intention of having centralised billing system and also paid the service tax for the various services rendered by them through their branch offices and site offices. The Department has not disputed the payment of such service tax. The ST-3 returns of the relevant period were filed also which clearly mentioned about the availment of the Cenvat credit by the appellant assessee. So in such circumstances, it cannot be alleged that the appellant assessee had any time suppressed the material fact from the department with intention of committing any fraud or suppression of the fact, before the department. There is no question of suppression of fact and the demand, if at all is required to be raised by Revenue, it was to be done within normal period. Interest - Held that - As the entire demand have been paid by the assessee along with interest as per their own calculation which has been accepted by the adjudicating authority - interest not leviable. Penalty - Held that - The demand has been raised for the impugned period in year 2007 which is held to be time barred, as there was no suppression on the part of the appellant assessee. As the demand itself is not sustainable, there is no question of payment of interest and imposition of penalty. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
1. Appeal against non-imposition of penalty under Sections 76 and 78 of Finance Act, 1994 and non-imposition of interest on demand confirmed and appropriated under Section 75 of the Act.
2. Appeal against confirmation of duty amount, interest, and penalty under the Act and Service Tax Rules, 1994.

Analysis:
1. The appellant, a provider of taxable services, availed Cenvat credit on input services, leading to show cause notices for denying credit and recovering service tax amounts. The appellant contended that their centralised registration entitled them to avail credit based on branch/site invoices. They argued that the order disallowing credit was unsustainable due to their centralised registration predating the Cenvat Credit Rules of 2004. They also highlighted prior service tax payments accepted by the department without objection, challenging the imposition of penalties and interest.

2. The Tribunal found that the appellant had informed the department of their centralised billing system since 1997, supported by communications and returns. The adjudicating authority's view that the appellant lacked centralised registration was deemed incorrect. The demand raised in 2007 was held time-barred as there was no suppression of facts by the appellant. Regarding the second show cause notice, the authority's calculation method for service tax value was disputed by the appellant, who provided a reconciliation statement. The appellant's payment of the entire demand along with interest was accepted, leading to the dismissal of the department's appeal for interest payment and penalty imposition.

3. The Tribunal concluded that the demand was unsustainable due to the absence of suppression by the appellant, rendering interest and penalty unnecessary. The appeal by the department was dismissed, and the appellant's appeal was allowed, emphasizing the lack of suppression of facts and the time-barred nature of the demand.

Judgment Summary:
The Tribunal addressed appeals concerning penalty imposition and interest under the Finance Act, 1994. The appellant's challenge against duty amount confirmation, interest, and penalty imposition was analyzed. The appellant's centralised registration history and prior tax payments were crucial in determining the sustainability of the demand. The Tribunal dismissed the department's appeal, emphasizing the absence of suppression and the time-barred nature of the demand, thus allowing the appellant's appeal.