2017 (11) TMI 93 - AT - Service Tax

CENVAT credit - unregistered premises - Held that - similar issue decided in the case of M/s Actis Advisers Pvt. Ltd. Vs. CST, Delhi-IV 2014 (9) TMI 182 - CESTAT NEW DELHI , where it was held that denial of Cenvat Credit on the ground that at the time of receipt of inputs/input services by a output service provider, there was no registration with the Central Excise, is not correct - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appellant's eligibility for Cenvat credit on services used in unregistered premises.
2. Imposition of interest and penalties by the Adjudicating authority.
3. Appeal against penalties and interest demand.

Analysis:
1. The appellant, a service provider registered with the Service Tax department, was found to have taken Cenvat credit for services used in its unregistered Hyderabad office. The Service Tax Department objected to this, leading to a show cause notice for confirmation of wrongly availed Cenvat credit, interest, and penalties. The Adjudicating authority dropped the service tax demand but confirmed interest liability and imposed penalties. On appeal, the Commissioner (Appeals) set aside the penalties but upheld the interest demand, prompting the present appeal before the Tribunal.

2. The appellant argued that since the service tax/Cenvat demand was dropped, no interest should be payable as it is compensatory and required only when duty or service tax is not paid within the stipulated time. Citing a Tribunal decision in a similar case, the appellant contended that interest cannot be levied when there is no adjudication demand. The respondent, on the other hand, supported the findings of the impugned order.

3. The Tribunal noted that the issue at hand was settled in a previous case and held that the appellant was entitled to Cenvat credit for services received during the period when the office was unregistered. Referring to precedents, the Tribunal concluded that denial of Cenvat credit due to lack of registration at the time of service receipt was incorrect. Consequently, the Tribunal set aside the interest demands, modified the impugned order, and allowed the appeal in favor of the appellant.

This judgment clarifies the eligibility of a service provider for Cenvat credit on services used in unregistered premises, addresses the imposition of interest and penalties by the Adjudicating authority, and resolves the appeal against the penalties and interest demand based on established legal principles and precedents.