2021 (12) TMI 1014 - AT - Service Tax

Dropping of demand under Rule 6 of the CCR, 2004 - appeal against the option of reduced penalty of 25% given by the Ld.Commissioner (Appeals) - reversal of Rule 6 of CCR, 2004 on the abated value of Restaurant Services by taking the same as exempted services and applying 6% on the value of exempted services so determined to raise the demand of recovery of common Cenvat credit - HELD THAT - The issue is no more res-integra in view of CBIC s CIRCULAR NO 213/3/2019-Service Tax, dated July 05, 2019 wherein it has been clarified by the board that there is no requirement of reversal under Rule 6 of the CCR, 2004 for provision of restaurant services. Thus, the Revenue s appeal to that extent is liable to be dismissed. Imposition of penalty on the amounts of Service Tax already paid by the Respondent during the course of audit before issuance of SCN - HELD THAT - Both the lower authorities have erred in confirming the penalty as it is a settled principle that when tax is paid along with interest before issuance of SCN (other than cases of suppression or willful mis-statement), the Department cannot issue SCN in terms of section 73(3) of the Finance Act, 1994 - In the instant case of the Respondent, the Department has mechanically issued SCN alleging suppression of facts without according any reasons for such allegation. The appeal of the Revenue to the extent of imposition of penalty on the Respondent is also dismissed - The Departmental appeal is dismissed in entirety and the order of the first appellate authority is modified to the extent of deleting the imposition of penalty - decided against Revenue.

Summary

Issues:
1. Appeal against dropping of demand under Rule 6 of CCR, 2004.
2. Appeal against reduced penalty of 25%.
3. Cross objection for penalty confirmed by the first appellate authority.

Analysis:
1. The Respondent appealed the demand confirmed by the lower authority, resulting in the first appellate authority dropping a portion of the demand under Rule 6 of the CCR, 2004. The Revenue appealed against this decision, but the Respondent argued that a circular clarified no reversal was needed for Restaurant Services, citing a relevant judgment. The Tribunal upheld this argument, dismissing the Revenue's appeal on this issue.

2. The Revenue also appealed the reduced penalty of 25% granted by the first appellate authority. The Respondent contended that penalty imposition on already paid amounts before the issuance of SCN was unjustified, citing legal principles and judgments. The Tribunal agreed, citing precedents, and dismissed the Revenue's appeal on the penalty issue.

3. The Tribunal found that the penalty imposition on the Respondent for amounts already paid before the SCN was against established legal principles. Citing relevant legal provisions and judgments, the Tribunal dismissed the Revenue's appeal on the penalty issue, thereby upholding the first appellate authority's decision to delete the penalty imposition. The cross objection regarding the penalty was disposed of accordingly.