2012 (5) TMI 219 - AT - Service Tax

The appellant is engaged in providing Advertising services to their customers and availed CENVAT Credit of Service Tax paid on Hotel services, Catering service, Decorator service and Pathological laboratory service. Proceedings were initiated on the ground that such credit is not admissible - held that - except for the Service Tax paid on both Pathological Laboratory Service and Catering Service, CENVAT Credit taken in respect of other services is held as admissible.

Summary

Issues:
Admissibility of CENVAT Credit on various services including Hotel services, Catering service, Decorator service, and Pathological laboratory service. Applicability of penalty under various Sections of Finance Act, 1994.

Analysis:

1. Admissibility of CENVAT Credit:
The appellant, engaged in providing Advertising services, availed CENVAT Credit on services like Hotel services, Catering service, Decorator service, and Pathological laboratory service. The impugned order denied the CENVAT Credit on the grounds of inadmissibility. The authorized representative argued for the admissibility of credit on Catering service for business promotion purposes. However, the representative did not contest the inadmissibility of credit on Pathological Laboratory services, citing welfare activity not eligible for credit. The CESTAT held the credit on Hotel services and Decorator service as admissible due to their direct nexus with the appellant's business activities.

2. Penalty under Finance Act, 1994:
Regarding penalties under various Sections of the Finance Act, 1994, the CESTAT invoked Section 80 of the Act. It considered the definition of input service, which includes services related to business activities. The tribunal found a bonafide belief in availing the credit on the discussed activities. As there was no evidence of deliberate evasion of duty, the penalties were set aside, considering the facts and submissions made during the hearing.

3. Final Decision and Disposal:
After detailed arguments and considerations, the CESTAT concluded that the CENVAT Credit on Catering service and Pathological Laboratory service was inadmissible, as the appellant dropped the claim for credit on these services. However, the Credit on Hotel services and Decorator service was held as admissible. The penalties under various Sections of the Finance Act, 1994 were set aside by invoking the provisions of Section 80 of the Act. The Stay Petition and the appeal were disposed of accordingly.

This judgment clarifies the admissibility of CENVAT Credit on specific services based on their nexus with the appellant's business activities and welfare considerations. It also highlights the application of penalties under the Finance Act, 1994, and the criteria for invoking Section 80 to set aside penalties in cases of bonafide belief without intent to evade duty.