2019 (9) TMI 329 - HC - Service Tax

Permission for withdrawal of appeal - Monetary amount involved in the appeal - Excess utilization of CENVAT Credit - It is alleged that respondent was entitled to utilize cenvat credit upto 20% of the service tax payable, whereas it was utilizing cenvat credit upto 100% of service tax payable - HELD THAT - At the time of hearing, learned counsel for the appellant admits that in view of instructions dated 22. 8. 2019 issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell) the instant appeal would not be maintainable before this Court, as demand amount i. e. 94, 57, 161/- is to be recovered, which is below the monetary limit of ₹ 1 Crore. Appeal dismissed as withdrawn.

Summary

Issues:
Delay in refiling the appeal, condonation of delay, maintaining separate account of cenvat credit, utilization of cenvat credit, contravention of Rule 6(3)(c) of 2004 Rules, recovery of excess cenvat credit, liability to pay penalty, recovery of interest, show cause notice, Order in Original, appeal before CESTAT, substantial questions of law, reliance on previous cases, monetary limit for appeal, withdrawal of appeal.

Analysis:

1. Delay in Refiling the Appeal:
The judgment begins by addressing the delay in refiling the appeal, with applications filed for condonation of the delay. One application sought condonation for a delay of 153 days, while the other application was for a delay of 2070 days. Both applications were supported by an affidavit from the Commissioner of Central Goods and Services Tax Commissionerate, Rohtak.

2. Maintaining Separate Account of Cenvat Credit:
The main case involved a respondent engaged in providing "Telephone Service" and registered for paying service tax. The allegation was that the respondent was not maintaining a separate account of cenvat credit for taxable and non-taxable services, contrary to Rule 6 of the Cenvat Credit Rules, 2004. It was found that the respondent had utilized excess cenvat credit, leading to a demand for recovery under Rule 14 of the 2004 Rules.

3. Liability and Penalty Imposition:
The appellant contended that the respondent had willfully suppressed the utilization of service tax credit, leading to a demand for recovery, penalty imposition under Rule 15 of the 2004 Rules, and interest recovery under Section 75 of the Act. A show cause notice was issued, and the Adjudicating Authority confirmed the demand, interest, and imposed a penalty equivalent to the demand amount.

4. Appeal and Substantial Questions of Law:
The respondent appealed before CESTAT, New Delhi, challenging the adjudication order. The Tribunal allowed the appeal, prompting the appellant to file the present appeal. Substantial questions of law were raised, questioning the correctness of the appellate authority's decision and the reliance on previous cases.

5. Monetary Limit for Appeal and Withdrawal:
During the hearing, it was noted that the appeal would not be maintainable as per the instructions issued by the Ministry of Finance, Department of Revenue, due to the demand amount being below the monetary limit. Consequently, the appellant sought withdrawal of the appeal, which was dismissed as withdrawn with the raised questions of law left open.

6. Condonation of Delay Applications:
As the appeal was dismissed as withdrawn, no orders were required to be passed on the applications seeking condonation of delay, thereby concluding the judgment without further action on the delay-related issues.

This detailed analysis covers the various issues addressed in the judgment, from the initial delay in refiling the appeal to the final decision on the withdrawal of the appeal based on the monetary limit for maintaining it.