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2019 (5) TMI 468 - AT - Service TaxCENVAT Credit - non-contravened of Rules as made under Cenvat Credit Rules, 2004 - penalty - HELD THAT - The idea of introducing cenvat credit had a preconceived motive of reducing cascading effects of indirect taxes, as a result of which, the ultimate consumers will have final products and services at a much lower price. The idea was conceived by the Government in the form of introducing Cenvat Credit Fules, 2004. The basic conditions of allowing credit was that the person, who is willing to take such credit, should have had paid the taxes to the Government Exchequer. The appellant s firm in order to provide services to M/s Century Pulp Paper for procurement of EPCG Licenses from DGFT, Kolkata, had availed the services of M/s Sakshi Tradelink Pvt. Ltd. represented by Mr.Rajesh Singh. The document filed by the ld.Counsel that M/s Sakshi Tradelink Pvt. Ltd. is regularly complying with all the statutory liabilities before various Department and their name is also portal all the Ministries of Company Affairs, which shows that they have filed their Annual Returns and Statements upto 31st March, 2018. It is also showed their registered office and other details. Copies of the Bank statement of the Appellant Firm reflect payments made to M/s Sakshi Tradelink Pvt. Ltd. Hon ble Allahabad High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX VERSUS M/S. JUHI ALLOYS LTD., ANIL KUMAR SHUKLA 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT , have dismissed the Departmental Appeal, where similar issue was raised by the Department in respect of the invoices, on which cenvat credit was availed. Penalty - HELD THAT - Since the appellants have paid the entire amount of demand along with interest, which is also almost equal to the amount of demand, no penalties should be imposed - the penalties are set aside. Appeal allowed.
Issues:
1. Disallowance of cenvat credit for the period 2009-10 and imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. 2. Allegations of irregular availment of cenvat credit based on investigation by Officers of Survey, Intelligence & Verification (SIV) of Service Tax Department. 3. Rejection of appeal by the ld. Commissioner (Appeals) leading to the present appeal before the Tribunal. 4. Dispute over the physical receipt of services and liability to avail cenvat credit. 5. Compliance of statutory obligations by M/s Sakshi Tradelink Pvt. Ltd. and supporting documents provided by the appellant. 6. Interpretation of Rule 9(3) of the Cenvat Credit Rules, 2004 regarding reasonable steps to ensure payment of appropriate excise duty on inputs for availing cenvat credit. 7. Preconceived motive behind introducing cenvat credit to reduce cascading effects of indirect taxes and promote lower prices for consumers. 8. Setting aside of impugned orders and allowing the appeal based on the judgment of the Hon'ble Allahabad High Court. 9. Decision on penalties in light of payment of entire demand along with interest by the appellants. Analysis: 1. The case involved the disallowance of cenvat credit for the period 2009-10 and the imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. The appellant, a partnership firm, was alleged to have irregularly availed cenvat credit following an investigation by the Officers of Survey, Intelligence & Verification (SIV) of the Service Tax Department. The Adjudicating Authority disallowed the credit and imposed penalties, which were upheld by the ld. Commissioner (Appeals), leading to the appeal before the Tribunal. 2. The appellant contended that they had not contravened any rules under the Cenvat Credit Rules, 2004, and had duly availed cenvat credit based on invoices from M/s Sakshi Tradelink Pvt. Ltd. The appellant provided various documents to support their claim, including invoices, ledger accounts, bank statements, and certificates. The appellant argued that they had received intangible services and maintained proper records as evidence, citing a judgment of the Hon'ble Allahabad High Court. 3. The Revenue reiterated the lower authorities' order, highlighting a statement from one of the appellant firm's partners suggesting that they had not physically received the services and thus were not liable to avail cenvat credit. However, the Tribunal observed that the appellant had availed services from M/s Sakshi Tradelink Pvt. Ltd. for specific purposes and that the service provider had complied with statutory obligations. 4. The Tribunal referred to the judgment of the Hon'ble Allahabad High Court in a similar case, emphasizing the importance of taking reasonable steps to ensure payment of appropriate excise duty on inputs for availing cenvat credit. The Tribunal noted that the introduction of cenvat credit aimed to reduce cascading effects of indirect taxes and promote lower prices for consumers. Following the Allahabad High Court's judgment, the Tribunal set aside the impugned orders and allowed the appeal, providing consequential relief to the appellant. 5. Regarding the penalty imposed, the Tribunal considered the appellants' payment of the entire demand along with interest and decided to set aside the penalties, as they were almost equal to the amount of the demand. The Tribunal concluded the judgment by allowing the appeal and providing relief to the appellant based on the principles established in the Allahabad High Court's decision.
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