2017 (10) TMI 509 - AT - Service Tax

Benefit of N/N. 1/2006 ST dated 1.03.2006 - availing Cenvat Credit while availing benefit of abatement - Credit used for payment of tax on GTA Service - Held that - N/N. 1/2006-ST dated 01.03.2006 provides the exemption from payment of service tax, subject to fulfillment of certain conditions. One of the conditions itemized in the said notification is that no cenvat credit of duty/ service tax paid on inputs, capital goods and input services used for providing the taxable service shall be taken under the CCR, 2004 - Since cenvat credit in the present case has been taken by the appellant, the benefit contained in the notification dated 01.03.2006 is not available for non-fulfillment of the condition mentioned therein - appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of Notification No.1/2006-ST dated 01.03.2006 regarding exemption from service tax.
2. Eligibility of cenvat credit for payment of service tax.
3. Adjudication of service tax demand and penalty under Section 76 of the Finance Act, 1994.

Analysis:

Issue 1: Interpretation of Notification No.1/2006-ST dated 01.03.2006
The case involved a dispute regarding the exemption from payment of service tax under Notification No.1/2006-ST dated 01.03.2006. The notification specified conditions for exemption, including the non-availability of cenvat credit on duty/service tax paid on inputs, capital goods, and input services used for providing taxable services. The Commissioner (Appeals) denied the exemption benefit to the appellant as they had availed cenvat credit for service tax indicated in some bills. The Tribunal concurred with this decision, stating that since cenvat credit was taken, the appellant did not fulfill the condition of the notification, rendering the exemption unavailable.

Issue 2: Eligibility of cenvat credit for payment of service tax
The appellant had availed and utilized cenvat credit for payment of service tax on goods transport agency services. The Department initiated show cause proceedings as the appellant was deemed ineligible for the exemption provided under Notification No.1/2006-ST dated 01.03.2006. The Tribunal noted that the appellant's use of cenvat credit led to the denial of the exemption benefit, ultimately upholding the decision of the Commissioner (Appeals) in this regard.

Issue 3: Adjudication of service tax demand and penalty under Section 76
The adjudication resulted in the confirmation of service tax demand amounting to a specific sum, along with interest, and the imposition of an equal penalty under Section 76 of the Finance Act, 1994. The Commissioner (Appeals) upheld this decision, and the Tribunal found no infirmity in the impugned order. Consequently, the appeal filed by the appellant was dismissed, affirming the adjudication order and penalty imposition.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) regarding the denial of exemption under Notification No.1/2006-ST due to the appellant's availing of cenvat credit for service tax payments. The confirmation of service tax demand and penalty imposition under Section 76 were also upheld, resulting in the dismissal of the appellant's appeal.