2018 (2) TMI 1124 - AT - Service Tax

Penalty u/s 78 - intent to evade - Held that - there was no intention to evade service tax on the part of the appellant because the appellant has filed the returns and in ST-3 return, he has shown the adjustment under Column D2 instead of D4 which is only an error in disclosure - from the perusal of the service invoice which is placed on record and also the credit notes issued by the appellant and the disclosure in the service tax return, there is no revenue loss in the present case as it is only an adjustment of the credit availed - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against disallowance of input service credit and penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The appellant, registered under various service categories, availed CENVAT credit based on two credit notes but faced disallowance by the original authority. The Commissioner (A) upheld the disallowance but dropped the penalty under Section 78.

2. The appellant argued that the impugned order lacked legal basis, the show-cause notice was time-barred, and the issue was revenue neutral. The appellant contended that the tax return filing date and the notice issuance date exceeded the prescribed limitation period. Additionally, the appellant claimed an error in disclosing credit note amounts and cited Rule 6(3) of the Service Tax Rules, 1994, allowing adjustments for excess tax paid, supported by relevant case laws.

3. The AR acknowledged the appellant's non-compliance with CENVAT Credit Rules but emphasized the absence of intent to evade tax, leading to the dropped penalty under Section 78 by the Commissioner (A).

4. The Tribunal found no intent to evade tax by the appellant, noting the inadvertent disclosure error in the tax return. Considering the adjustments made and the absence of revenue loss, the Tribunal referenced previous decisions allowing excess tax adjustment for subsequent periods. Consequently, the Tribunal deemed the impugned order legally unsustainable and allowed the appeal, setting aside the original decision.

This comprehensive analysis highlights the legal arguments, factual circumstances, and the Tribunal's reasoning leading to the favorable decision for the appellant.