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2016 (2) TMI 185 - HC - Central ExciseExtended period of limitation and, penalty imposed on the assessee - Held that - Extended period cannot be invoked and demand has to be restricted to the period within one year from the date of show cause notice. The amount involved within the period of one year should be worked out by the adjudicating authority and communicated to the appellant. The same should be paid by the appellant alongwith interest. So far as imposition of penalty upon the appellant is concerned, no intention to evade duty can be attributed to the appellant when the issue of admissibility of cenvat credit on the amount of service was disputed. Accordingly, penalty imposed by the adjudicating authority under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 111AC of the Central Excise Act, 1944 is set aside. Thus no question of invocation of extended period of limitation of imposing penalty. - Decided in favour of assessee
Issues:
1. Extended period of limitation for imposing penalty. 2. Admissibility of CENVAT credit on service tax of guest house and colony maintenance. 3. Imposition of penalty under Rule 15(2) of CCR, 2004 read with Section 11AC of CEA,1944. Extended Period of Limitation for Imposing Penalty: The appellant contested the imposition of penalty based on the extended period of limitation. The Tribunal noted that the issue of admissibility of CENVAT credit on guest house and colony maintenance services was disputable, especially considering the conflicting decisions by different forums. The Tribunal emphasized that when an issue is disputable and a final view taken by the Tribunal favored the assessee, there was a bona fide belief that the credit was admissible. The Tribunal further highlighted that the reversal of the favorable view by the High Court meant that the extended period could not be invoked for imposing the penalty. Consequently, the demand was restricted to the period within one year from the date of the show cause notice, and the penalty was set aside due to the lack of intention to evade duty. Admissibility of CENVAT Credit on Service Tax of Guest House and Colony Maintenance: The principal tax liability in question was related to the availing of CENVAT credit on service tax for guest house and colony maintenance. The appellant did not dispute this liability based on a decision of the Gujarat High Court. However, the appellant challenged the invocation of the extended period of limitation for penalty imposition. The Tribunal upheld the appellant's argument, emphasizing that the issue of admissibility of the credit was disputable, especially given the differing decisions by various forums. The Tribunal concluded that since the issue was debatable and the Tribunal had previously ruled in favor of the assessee, the extended period could not be applied for penalty purposes. Imposition of Penalty under Rule 15(2) of CCR, 2004 read with Section 11AC of CEA,1944: Regarding the imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1944, the Tribunal set aside the penalty. It was determined that no intention to evade duty could be attributed to the appellant, especially considering the disputable nature of the issue related to the admissibility of the CENVAT credit on the services in question. The Tribunal's decision to annul the penalty was based on the lack of conclusive evidence of any intent to evade duty on the part of the appellant. The High Court affirmed the Tribunal's decision, stating that no error was found in the Tribunal's view, and consequently dismissed the tax appeal. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the disputable nature of the issue of admissibility of the CENVAT credit on guest house and colony maintenance services, which led to the dismissal of the tax appeal.
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