2009 (7) TMI 1085 - Commissioner - Service Tax

Summary

In the Commissioner of Central Excise (Appeals), Pune-II case, M/s The Rajasthan Bank Ltd. appealed against an order alleging misuse of cenvat credit. The appellant, a service provider, did not maintain separate accounts for taxable and non-taxable services. The lower authority confirmed the allegations, imposing penalties and interest. The appellant appealed, arguing that Rule 6(5) allows 100% credit utilization. At the hearing, the appellant's representatives presented their case. The Commissioner reviewed the case and found that Rule 6(5) indeed allows 100% credit for specified taxable services. As the appellant was compliant, the penalties and interest were deemed unnecessary, and the appeal was allowed. The judgment clarified the distinction between Rule 6(3) and Rule 6(5), emphasizing the appellant's eligibility for full credit. This ruling highlights the importance of correctly interpreting tax rules to avoid unnecessary penalties.