2015 (10) TMI 1980 - AT - Central Excise

Utilization of CENVAT Credit - GTA Service - Imposition of penalty - Held that - Soon after being pointed out by the CERA audit, the appellant had discharged the Service Tax on GTA services availed through TR-6 challan and also the interest on such amount of service tax. On going through the orders of the adjudicating authority as well as the ld. Commissioner (Appeals), I do not find any reasoning/ observation whereby it could be inferred that the appellant had deliberately defied the provisions of law in discharging the service tax. On the other hand, now it is a settled position of law that the liability for payment of service tax towards GTA service under the relevant provisions could be discharged from the CENVAT Credit account. In the result, imposition of penalty on the Appellant is devoid of merit, accordingly the order impugned to the extent of imposition of penalty is set aside. - Decided in favour of assessee.

Summary

Issues:
Appeal against Order-in-Appeal regarding wrong utilization of CENVAT Credit in discharging service tax on GTA service.

Analysis:
The appellant, engaged in manufacturing paints, received GTA services as input services and discharged service tax through CENVAT Credit. However, upon audit, it was found that the CENVAT Credit was utilized incorrectly. The appellant then paid the amount along with interest. The issue revolved around the imposition of penalty for the initial payment of service tax through CENVAT Credit and later through cash.

The appellant's representative argued that there was no intention to misuse the CENVAT Credit and cited judgments from various High Courts supporting the payment of service tax through CENVAT Credit. The Revenue's representative supported the findings of the Commissioner(Appeals).

The Tribunal, after considering the submissions, noted that the appellant promptly rectified the error by paying the service tax and interest upon detection by the audit. The Tribunal observed that there was no deliberate defiance of the law by the appellant. It was established that the liability for service tax on GTA services could be discharged through the CENVAT Credit account. Consequently, the Tribunal found the penalty imposition unwarranted and set it aside, disposing of the appeal in favor of the appellant.