2022 (10) TMI 320 - AT - Service Tax

Short payment of service tax - Works Contract Services services - Supply of Tangible Goods services - Supply of Manpower services - period 01.10.2014 to 30.06.2017 - extended period of limitation - penalty u/s 77 and 78 of FA - HELD THAT - The transaction of input service of SOTG is duly recorded in the books of accounts. The appellant have received the service with supporting invoices and payment have been made in the regular course of business mainly through bank transfer as is evident from the copy of ledger account of the service provider maintained by the appellant in the books of account. The amount paid are also reflected in the bank account of the appellant, thus, the genuineness of the transaction is established. Admittedly, it is not the case of Revenue that appellant is claiming the credit second time. Penalty u/s 78 of FA - HELD THAT - The penalty is not imposable under Section 78 as the transaction is found recorded in the books of account and the short payment is mainly attributable to clerical error. Penalty under Section 77 - HELD THAT - Penalty is confirmed as there is admittedly failure on the part of the appellant to assess and pay correct duty/ tax. Appeal allowed in part.

Issues involved: Whether cenvat credit on input services has been rightly demanded and penalty rightly imposed under Section 78 and 77 of the Act.

Analysis:

1. Factual Background: The appellant, registered with the Service Tax Department, provides various services including Works Contract Services, Supply of Tangible Goods, and Supply of Manpower. The Revenue alleged a short payment of service tax based on third-party data compared with the appellant's balance sheet and returns, leading to a show cause notice for the period 01.10.2014 to 30.06.2017.

2. Contention and Reply: The appellant, in response, admitted to the short payment and deposited the balance amount, claiming adjustment of input tax credit not taken earlier. However, the Revenue, in the order-in-original, denied cenvat credit for input services received during 2014-15 due to a procedural lapse in claiming credit within the stipulated time.

3. Adjudication and Penalties: The order-in-original confirmed the proposed demand, allowed credit only for a specific amount, imposed interest under Section 75, and penalties under Sections 77 and 78. The appellant, dissatisfied, appealed to the Commissioner (Appeals) who upheld the original order, leading to the current appeal before the Tribunal.

4. Appellant's Arguments: The appellant argued that the transactions in question were duly recorded, taxes were paid, and returns filed. They cited precedents and legal provisions to support their claim for cenvat credit and relief from penalties under Sections 77 and 78.

5. Revenue's Stand: The Revenue relied on the original order and opposed the appellant's contentions during the appeal.

6. Tribunal's Decision: The Tribunal considered the facts, noting that the transactions were recorded, payments made through legitimate channels, and the error was more clerical in nature. Citing precedents, the Tribunal allowed the cenvat credit, set aside the penalty under Section 78, but confirmed the penalty under Section 77 due to the failure to assess and pay the correct duty/tax.

7. Final Verdict: The Tribunal partially allowed the appeal, setting aside the penalty under Section 78 while confirming the penalty under Section 77, providing consequential benefits to the appellant based on the established facts and legal precedents.

This detailed analysis of the judgment highlights the procedural, substantive, and legal aspects considered by the Tribunal in deciding the issues related to cenvat credit and penalties under the relevant sections of the Act.

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