2019 (5) TMI 916 - AT - Service Tax

CENVAT Credit - common input services used for providing taxable and exempted services - Rule 6(3) of CENVAT Credit Rules, 2004 - appellant had not filed any intimation regarding their option to follow the procedure prescribed in Rule 6(3)((ii) read with sub-rule (3A) of Rule 6 of the CENVAT Credit Rules, 2004 - demand of an amount equal to 8% (6% w.e.f 07.07.2009) of the value of exempted services provided by them - HELD THAT - The issues raised in the present appeal are identical to those decided by CESTAT in case of M/S. HDFC BANK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-II 2018 (9) TMI 312 - CESTAT MUMBAI and M/S. UCO BANK, KOLKATA VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA 2014 (9) TMI 820 - CESTAT KOLKATA . Since the issue is no longer res-integra and covered by the earlier decisions of tribunal, we respectfully follow the earlier orders, and remand this matter back to the adjudicating authority to reconsider the issue of limitation - In respect of all other issues including interest and penalties we agree with the findings in the impugned order subject to re-quantification of same depending on the findings on the issue of limitation. Appeal allowed by way of remand.

Summary

Issues:
1. Challenge to the order of the Commissioner regarding recovery of amount, interest, and penalty under CENVAT Credit Rules.
2. Appellants' contention of entitlement to avail whole credit and challenge based on bonafide belief.
3. Demand for recovery of amount and interest on CENVAT Credit.
4. Imposition of penalty under CENVAT Credit Rules.
5. Applicability of interest and penalty based on intention to evade payment of taxes.
6. Requirement to reverse CENVAT credit and issues related to exempted services.
7. Bar on demand by limitation.
8. Justification of penalty imposition by the Commissioner.

Analysis:
The appeal challenged the Commissioner's order directing recovery of a substantial amount against the appellants under CENVAT Credit Rules, along with interest and penalty. The appellants contended that they believed they were entitled to avail the entire credit due to a new sub-rule, and cited legal precedents to support their position. They argued that they had already repaid the credit on certain services before the show cause notice, indicating no intent to evade taxes.

The Tribunal considered the issues raised in the appeal in light of previous decisions involving similar matters. Referring to specific cases, the Tribunal addressed questions regarding the treatment of income from certain services as exempted, the requirement to reverse CENVAT credit, the applicability of interest and penalties, and the justification for penalty imposition. The Tribunal concluded that the matter should be remanded to the adjudicating authority for reconsideration solely on the ground of limitation, while agreeing with the findings on interest and penalties subject to re-quantification based on the limitation issue.

In light of the precedents and the specific issues raised by the appellants, the Tribunal allowed the appeal to be remanded for further consideration on the limitation aspect, emphasizing the need for a reassessment of the CENVAT Credit reversal, interest calculation, and penalty imposition. The Tribunal's decision highlighted the importance of addressing the limitation issue before finalizing the amounts to be recovered and penalties to be imposed, in line with the legal framework governing CENVAT Credit Rules and tax obligations.