2017 (12) TMI 718 - AT - Service Tax

CENVAT credit - penalty u/r 15(3) - N/N. 30/2012-ST dated 20.06.12, read with Rule 2(d)(1) (F) (b) of STR, 1994 - Held that - the disallowance of cenvat credit of ₹ 8,07,065/- was wrongly demanded by the Commissioner because the appellant had paid 100% service tax to the service provider and thereafter availed the cenvat credit therefore asking the appellant to pay the cenvat credit of ₹ 8,07,065/- is wrong and not sustainable in law. The learned Commissioner has not considered the factum of payment of 100% service tax on the services received by the appellant from the service provider. Further the question of payment of interest under Section 75 and the penalty u/r 15(3) of the CCR is not justified as the appellants have not committed any default - the service tax has already been paid and demanding the same again is wrong and illegal - the service tax has already been paid and demanding the same again is wrong and illegal and therefore the impugned order is not sustainable in law and the same is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowed cenvat credit wrongly availed during a specific period, penalty imposition under Rule 15, interest under Section 75, denial of credit for procedural infraction, eligibility of cenvat credit availed on invoices not bearing Service Tax Registration No., availed on invoices not addressed to registered premises, availed on invoices without paying 75% service tax under reverse charge mechanism.

Analysis:
The appeal was against an order disallowing cenvat credit of a specific amount wrongly availed during a particular period and demanding the same under Rule 14 of the Cenvat Credit Rules 2004. The appellant, registered under various categories, was audited, revealing irregularities in availing cenvat credit. The Commissioner disallowed the credit, imposed a penalty under Rule 15, and demanded the amount along with interest under Section 75. The appellant challenged this order.

The appellant argued that the impugned order was unsustainable as it did not consider facts and laws properly. They contended that credit availed on invoices without Service Tax Registration No. was valid as the service providers were registered, and credit based on invoices not addressed to registered premises was justified. Regarding the credit availed without paying 75% service tax under reverse charge mechanism, the appellant claimed the service provider paid 100% tax, supported by certificates, and they paid the disputed amount later. They argued against the demand for payment and penalty, stating they had paid the full tax amount.

The AR supported the impugned order findings. After hearing both sides and examining the records, the Judge found the disallowance of cenvat credit wrongly demanded. The appellant had paid 100% service tax, making the demand unjustified. The Judge noted the absence of default by the appellant, rejecting the need for interest and penalty. The order demanding payment was deemed wrong and illegal, set aside, and the appeal allowed with consequential relief.

In conclusion, the judgment favored the appellant, ruling against the disallowance of cenvat credit wrongly demanded and rejecting the need for interest and penalty. The decision was based on the appellant's payment of 100% service tax, rendering the demand unjustified and unsustainable in law.