2014 (6) TMI 240 - AT - Service Tax

Waiver of pre deposit - benefit of Notification No. 1/2006-S.T., dated 1-3-2006 - Non Payment of CENVAT Credit - Held that - reversal of Cenvat credit if at the stage of appellate stage is sufficient compliance of the conditions of the notification. At this juncture, learned SDR submits that it has to be verified whether the amount which has been reversed by the appellant is the correct amount which was confirmed by the lower authorities on which credit was taken. At this juncture, as we find that the appellants have reversed the Cenvat credit taken due to which benefit of Notification No. 1/2006 had been sought to be denied, we allow the application for waiver of pre-deposit amount of Service Tax involved and direct the learned SDR to confirm to this Bench by 26-12-2011 as to whether the Cenvat credit amount has correctly reversed as claimed by counsel and recovery of the dues is stayed till the disposal of appeal - Stay granted.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of service tax amount, interest, and penalty under Section 76 of the Finance Act, 1994.

Analysis:
The Appellate Tribunal CESTAT Ahmedabad considered a stay petition seeking the waiver of pre-deposit of a specific amount along with interest and penalty under Section 76 of the Finance Act, 1994. The Service Tax demand was confirmed by lower authorities due to the appellant claiming the benefit of a particular notification by paying a concessional rate of service tax, while not availing the Cenvat credit. The consultant for the appellant argued that they had reversed the Cenvat credit and provided evidence of the same. Referring to a judgment of the Hon'ble High Court of Allahabad, the consultant argued that the reversal of Cenvat credit at the appellate stage is sufficient compliance with the conditions of the notification. The Tribunal directed the learned SDR to verify whether the amount reversed by the appellant was correct and stayed the recovery of dues until the appeal was disposed of. The Tribunal allowed the application for waiver of pre-deposit based on the appellant's reversal of the Cenvat credit, which was the basis for denying the benefit of the notification.

This judgment highlights the importance of compliance with conditions for availing benefits under notifications related to service tax. The Tribunal emphasized the significance of correctly reversing Cenvat credit, as demonstrated by the appellant in this case, to qualify for the waiver of pre-deposit. The reference to a previous judgment from the Hon'ble High Court of Allahabad added legal weight to the argument presented by the appellant's consultant. The Tribunal's decision to stay the recovery of dues pending verification of the reversed amount shows a balanced approach to ensuring proper compliance while also considering the appellant's request for relief. The case underscores the procedural intricacies involved in tax matters and the necessity of meeting specific requirements to avail of favorable provisions under tax laws.