2009 (12) TMI 163 - AT - Service Tax

Cenvat Credit- Notification No. 35/04-ST dated 3.12.2004- The assessee a manufacturer of excisable goods had during the relevant period availed Goods Transport Agency services and had taken Cenvat Credit of certain amount on the basis of goods receipts issued by the GTA. However during that period as per the provisions of Notification No. 35/04-ST dated 3.12.2004 the assessee as receiver of the GTA service were liable to pay service tax and GTA were neither liable to pay any service tax and GTA were neither liable to pay any service tax nor the assessee on the basis of GRs/ Invoices issued by them could take cenvat credit of any such service tax paid by the GTA. Thus the adjudicating authority confirm the demand with penalty. Held that-however the assessee s appeal had already been disposed of by the Tribunal vide Final order No. 1243/09-SM dated 29.9.2009 by which the impugned order had been set aside and the matter had been remanded to the original authority for de novo decision after considering the claim of assessee based on Chartered Accountant s certificate that the credit though wrongly taken by it had not been utilized and that for this reason it was not liable for penalty. In view of the Tribunal s order dated 29.9.2009 setting aside the impugned order in appeal and remanding the matter to original adjudicating authority the department s appeal did not survive and was liable to be dismissed.

Summary

Issues:
Appeal against order-in-appeal reducing penalty under Cenvat Credit Rules, 2004 and appeal for enhancement of penalty based on suppression of fact and wilful misstatement.

Analysis:
The case involved a revenue's appeal against an order-in-appeal reducing the penalty under Cenvat Credit Rules, 2004. The Commissioner (Appeals) had upheld the Cenvat credit demand but reduced the penalty from Rs. 1,23,923 to Rs. 40,000. The Department sought an enhancement of penalty on the respondent due to the suppression of fact and wilful misstatement, invoking sub-rule (2) of rule 15 of Cenvat Credit Rules, 2004 along with section 11AC of the Central Excise Act, 1944. The respondent, a manufacturer of excisable goods, had availed GTA services and taken Cenvat credit based on GRs issued by service providers who charged service tax. However, the respondent, as the receiver of the service, was liable to pay the service tax under relevant provisions. The Dy. Commissioner confirmed the Cenvat credit demand and imposed a penalty, which was later reduced by the Commissioner (Appeals). The Department filed an appeal for enhancing the penalty amount.

The Tribunal heard arguments from both sides. The revenue's representative pleaded for penalty enhancement, emphasizing that the liability for service tax payment on GTA services was clear during the relevant period. On the other hand, the respondent's counsel highlighted a previous Tribunal order setting aside the impugned order and remanding the matter for fresh consideration. The Tribunal noted that the respondent's appeal had already been disposed of based on a Chartered Accountant's certificate stating that the wrongly taken credit had not been utilized for duty payment. Consequently, the Tribunal found that the Department's appeal for penalty enhancement did not stand as the matter had been remanded for a fresh decision. Therefore, the revenue's appeal was dismissed.

In conclusion, the Tribunal dismissed the revenue's appeal against the order-in-appeal reducing the penalty under Cenvat Credit Rules, 2004. The case highlighted the importance of compliance with tax liabilities and the consequences of misstatement or suppression of facts in tax matters. The decision underscored the need for accurate documentation and adherence to tax regulations to avoid penalties and legal repercussions.