2014 (8) TMI 886 - AT - Service Tax

Waiver of pre deposit - Adjustment of excess credit taken in subsequent year - Bar of limitation - Held that - Though the CENVAT Credit Rules do not provide for adjustment of excess credit taken in a given year, against the short credit taken during the subsequent year, in the facts of the case before us, it is evident that the appellant had taken excess credit of ₹ 1.01 crores in 2008-09 as against short credit availed of ₹ 1.11 crore during 2009-10. The mistake has occurred only due to rounding off of the percentages of the credit to the nearest decimal. Thus, there is no evidence forthcoming from the records that the taking of credit was on account of any intention to evade service tax. The show cause notice has been issued invoking the extended period of time. Therefore, the appellant has made out a prima facie case on account of time-bar. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.

Issues Involved:
Service tax demand confirmation, imposition of penalties, CENVAT credit reversal, rounding off percentages, intention to evade tax, extended period of time invocation, adjustment of excess credit against short credit, prima facie case on time-bar.

Service Tax Demand Confirmation and Penalties:
The appeal and stay petition were directed against an Order-in-Original confirming a service tax demand of Rs. 1.01 crore along with interest and penalties. The appellant, M/s. Jet Airways (India) Ltd., availed CENVAT credit on input services used for both dutiable and exempted services. The appellant reversed the credit attributable to exempted services based on percentages rounded off to 90% and 87% for different years. The excess credit in one year amounted to Rs. 1.01 crore, while the short credit in the subsequent year was Rs. 1.11 crore. The appellant argued that the rounding off caused the discrepancies, with no intention to evade tax. The Revenue contended that there is no provision for adjusting excess credit against short credit in the CENVAT Credit Rules. The Tribunal noted the rounding off error and lack of evidence of tax evasion, granting a waiver from pre-deposit and stay on recovery during the appeal.

CENVAT Credit Reversal and Rounding Off:
The appellant's case revolved around the reversal of CENVAT credit due to the usage of input services for both taxable and exempted services. The appellant reversed the credit based on rounded-off percentages for different years, leading to discrepancies in excess and short credits. The appellant argued that the rounding off caused the errors, with no intention to evade tax. The Revenue maintained that under Rule 6(3) of the CENVAT Credit Rules, credit attributable to exempted services must be reversed as per the prescribed procedure, without provisions for adjusting excess against short credit. The Tribunal acknowledged the rounding off issue and lack of evidence of intentional tax evasion, supporting the appellant's plea for a waiver and stay on recovery during the appeal.

Extended Period of Time Invocation and Time-Bar Issue:
The Revenue invoked the extended period of time in issuing the show cause notice, alleging discrepancies in CENVAT credit availed by the appellant. The appellant contended that the extended period invocation was legally unsustainable. The Tribunal found that the appellant had made a prima facie case on the time-bar issue, as the discrepancies in credit were due to rounding off errors rather than intentional tax evasion. Consequently, the Tribunal granted an unconditional waiver from pre-deposit and stayed the recovery of dues during the appeal process.

This detailed analysis covers the various issues involved in the legal judgment, including the service tax demand confirmation, CENVAT credit reversal, rounding off percentages, intention to evade tax, extended period of time invocation, adjustment of excess credit against short credit, and the prima facie case on the time-bar issue.

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