2018 (4) TMI 1466 - AT - Service Tax

Tour Operator Services - abatement - N/N. 01/06-ST dated 01/03/2006 - Held that - benefit of availment is allowable under the said Notification subject to the condition that the assessee does not utilize Cenvat Credit for payment of Service Tax - since the entire Cenvat Credit has already been paid back it is to be held as not availed ab initio - abatement to be allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Entitlement to avail abatement under Notification No. 01/2006-ST dated 01/03/2006 due to utilization of Cenvat Credit for payment of Service Tax.

Analysis:
The appellant, a registered Service Tax assessee for Tour Operator Services, availed abatement benefit under Notification No. 01/06-ST dated 01/03/2006. However, during the disputed period, it was found that the appellant utilized Cenvat Credit for the payment of Service Tax, leading to the disallowance of the abatement benefit and a demand for consequential Service Tax amounting to ?10,26,313. The appellant appealed against this decision.

During the hearing, the appellant's counsel argued that the utilization of Cenvat Credit was inadvertent, and the entire amount of Service Tax utilized had been reversed along with interest post the lower authorities' order. Citing relevant case laws, the appellant sought the extension of the abatement benefit.

On the other hand, the Revenue justified the impugned order disallowing the abatement benefit due to Cenvat Credit utilization for Service Tax payment.

The Tribunal observed that the appellant had indeed paid back the entire Cenvat Credit amount before the show cause notice was issued, along with interest. Considering this, the Tribunal held that since the Cenvat Credit had been repaid, it should be deemed as not availed ab initio. The Tribunal also noted that the reversal of Cenvat Credit with interest aligned with the principles established in the case laws cited by the appellant.

Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the consequential benefit of abatement. The appellant was deemed entitled to the abatement under Notification No. 01/2006-ST dated 01/03/2006, given the repayment of the Cenvat Credit and interest.

In conclusion, the Tribunal's decision favored the appellant, acknowledging the inadvertent utilization of Cenvat Credit and subsequent repayment, leading to the allowance of the abatement benefit.