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2024 (1) TMI 776 - AT - Service TaxCENVAT Credit - Input Service - availing the abatement under N/N. 1/2006 dated 01.03.2006 was in operation which did not allow abatement if cenvat credit including cenvat credit on input services has been availed - HELD THAT - The appellant has admitted that they have wrongly availed cenvat credit of Rs. 64,698/- because of the mistake committed by their newly appointed staff who was not aware of the Notification No. 1/2006 dated 01.03.2006. Subsequently, the appellant reversed the cenvat credit of Rs. 64,698/- alongwith interest and informed the department. Once the appellant has reversed the wrongly availed cenvat credit alongwith interest it would amount to as if no credit has been availed as held by the Hon ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. 1995 (12) TMI 72 - SUPREME COURT and subsequently followed by various Tribunals and the High Courts. The impugned order is not sustainable in law - Appeal allowed.
Issues involved:
The issues involved in the judgment are the demand of service tax, interest, and penalties confirmed by the Commissioner of Central Excise, Service Tax, Ludhiana against the appellant for wrongly claiming abatement and availing Cenvat Credit on input services. Issue 1: Demand of service tax, interest, and penalties: The appellant, engaged in providing services under the category of "Construction of Complex," was alleged to have wrongly claimed abatement and availed Cenvat Credit on input services. The show cause notice sought a demand of service tax amounting to Rs. 77,74,607/- for the period from 18.4.2006 to 30.09.2008. The Adjudicating Authority confirmed the demand along with interest and penalties, leading to the present appeal. Details: The appellant contended that the demand was unsustainable as they had reversed the wrongly availed Cenvat Credit on input services of Rs. 64,698/- along with interest. They argued that reversing the credit had the effect as if no credit had been availed, citing relevant legal precedents. The appellant also highlighted that the benefit of abatement under Notification 1/2006-ST cannot be denied based on availing Cenvat Credit, as upheld in various decisions by Tribunals and High Courts. Issue 2: Imposition of penalties under Section 76 and 77: The appellant's counsel argued against the imposition of penalties under Section 76 and 77, citing a decision by the Hon'ble Punjab and Haryana High Court in support of their position. Details: The appellant's counsel contended that there was no malafide intention in availing the credit, as the filing of statutory returns regularly reflected the facts of Cenvat Credit and abatement. They argued that the penalties should not be imposed based on the circumstances of the case and the legal precedent provided by the Hon'ble Punjab and Haryana High Court. Judgment: After considering the submissions of both parties and the material on record, the Tribunal found that the appellant had wrongly availed Cenvat Credit on input services due to a mistake by their staff. However, the appellant subsequently reversed the credit along with interest, which was deemed to nullify the initial credit availed. Citing legal precedents, including a decision by the Hon'ble Supreme Court, the Tribunal held that the demand based on denial of abatement under Notification 1/2006-ST was not sustainable in law. Therefore, the impugned order was set aside, and the appeal of the appellant was allowed with consequential relief, if any, as per law.
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