2019 (7) TMI 828 - AT - Service Tax

CENVAT Credit - providing of taxable and exempt services - non-maintenance of separate records - Rule 6(3) CCR, 2004 - suppression of facts - penalty - extended period of limitation - HELD THAT - From the facts alleged in the SCN, there is no contumacious conduct on the part of the appellant nor there is any act of suppression of any information from Revenue - Whatever laps has occurred, is due to lack of interpretational skill and understanding on the part of the appellant. Further pursuant to the order-in-original the appellant have paid ₹ 9,33,536/- including interest by way of Challan No. 0023 on 1st March, 2018. The penalty as retained by the Commissioner (Appeals) is set aside and the extended period of limitation is not invocable under the facts and circumstances - appeal allowed.

Summary

Issues:
1. Maintenance of separate accounts of CENVAT credit for output services
2. Reversal of proportionate credit as required under Rule 6(3) CCR, 2004
3. Demand for reversal of CENVAT credit and penalty under Rule 14 and Rule 15 (3)
4. Appeal before Commissioner (Appeals) and subsequent modifications in the demand
5. Grounds of appeal before the Tribunal
6. Allegations of failure to maintain proper records for input services
7. Contumacious conduct and suppression of information
8. Deletion of penalty and non-application of extended period of limitation

Analysis:

1. The appellant, an automobile dealer and service station, was issued a show cause notice for not maintaining separate accounts of CENVAT credit for taxable and exempt services and not reversing the proportionate credit as required under Rule 6(3) CCR, 2004. The demand for reversal of CENVAT credit and penalty under Rule 14 and Rule 15 (3) was confirmed in the order-in-original.

2. The Commissioner (Appeals) modified the demand, confirming a proportionate amount towards exempt services and disallowing CENVAT credit for specific services. However, the proportionate penalty was upheld under Rule 15 (3) of CCR, leading the appellant to appeal before the Tribunal.

3. The appellant argued that they maintained proper records of transactions and supplied all data for the show cause notice, claiming no contumacious conduct. They contended that any lapses were due to lack of interpretational skill, requesting the deletion of penalty and non-application of the extended period of limitation.

4. After considering the contentions, the Tribunal found no contumacious conduct or suppression of information by the appellant. The lapses were attributed to a lack of interpretational skill rather than intentional wrongdoing. The appellant had already paid the demanded amount, leading the Tribunal to set aside the penalty and rule out the invocability of the extended period of limitation.

5. The Tribunal allowed the appeal, emphasizing the absence of contumacious conduct and the appellant's compliance with the payment of the demanded amount. The decision highlighted the importance of maintaining records and understanding interpretational aspects to avoid such disputes in the future.