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2015 (2) TMI 92 - AT - Service TaxAvailability of Cenvat credit of service tax paid on outdoor catering - charging of the cost of outdoor catering from the employees - Held that - As regards the availability of credit, where the employees are not charged, I find that the issue is covered in favour of the assessee. The appellants are not contesting the credit involved in respect of the cases where the cost is being recovered from the employees. Accordingly, I set aside the impugned order and direct the authority below to quantify the exact quantum of credit required to be reversed and also to verify the appellants claim of reversal of the same. As regards interest, if the credit stands reversed before utilisation, the interest would not be leviable in terms of Karnataka High Court decision 2011 (4) TMI 969 - KARNATAKA HIGH COURT . The adjudication authority would also get the said fact verified and would pass fresh orders accordingly. - As regards penalty, I agree with the ld. Advocate that it is not a case of any mala fide intention so as to invoke the penal provision. Accordingly penalty imposed is set aside. - Decided in favour of assessee.
Issues:
1. Availability of Cenvat credit on service tax paid on outdoor catering. 2. Reversal of credit and imposition of penalty. 3. Applicability of interest on reversed credit. 4. Penalty imposition based on mala fide intention. Analysis: Issue 1: Availability of Cenvat credit on service tax paid on outdoor catering The dispute in the appeals revolves around the availability of Cenvat credit on service tax paid on outdoor catering. The Member (J) refers to a Larger Bench decision in the case of CCE v. GTC Industries Ltd. where the legal issue was settled. However, citing the law declared by the Hon'ble Bombay High Court in the case of CCE, Nagpur v. Ultratech Cement Ltd., it is noted that the credit would not be available if the cost of outdoor catering is charged from the employees. The Member (J) acknowledges that the issue is covered in favor of the assessee when employees are not charged for the service. Issue 2: Reversal of credit and imposition of penalty The Advocate for the Appellant admits that the credit to the extent not available has already been reversed. He argues that during the relevant period, earlier decisions favored the assessee, and therefore, there should be no penalty imposed. The Member (J) agrees that it is not a case for the imposition of a penalty, as there is no evidence of any mala fide intention. Issue 3: Applicability of interest on reversed credit Regarding interest on the reversed credit, the Advocate contends that as the credit was reversed without utilization, the decision of the Hon'ble Karnataka High Court in the case of CCE v. Bill Forge Pvt. Ltd. should apply. The Member (J) concurs, stating that if the credit was reversed before utilization, interest would not be leviable as per the Karnataka High Court decision. Issue 4: Penalty imposition based on mala fide intention The Member (J) agrees with the Advocate that there is no mala fide intention in this case to warrant the imposition of a penalty. Therefore, the penalty imposed is set aside. In conclusion, the appeals are disposed of with the direction for the authority below to quantify the exact quantum of credit required to be reversed and verify the appellant's claim of reversal. The adjudication authority is instructed to verify the facts related to interest and pass fresh orders accordingly, while penalty imposition is set aside due to the absence of any mala fide intention.
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