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2023 (10) TMI 527 - AT - Service TaxCENVAT Credit - Wrong utilization of cenvat credit - input services - credit on the basis of debit notes - common inputs services used for both taxable and exempted services - non-maintenance of separate books of accounts - violation of Rule 6 (1) of CCR, 2004 - non-payment of interest - penalty. Wrong utilization of cenvat credit over and above the 20% of the output tax liability in contravention of Rule 6 (3) (c) of CCR 2004 - HELD THAT - Prior to 01.04.2008, there was restriction that when an assessee is providing both exempted services and taxable services, the credit can be utilized only upto 20%. In the present case, it is not disputed that the appellant has utilized credit for payment of the service tax beyond the prescribed 20%. This provision imposing restriction was omitted w.e.f. 01.04.2008. After 01.04.2008, there was confusion as to whether an assessee has to repay the amounts so utilized over and above the 20% cap. The Tribunal in the case of M/S. GE MONEY FINANCIAL SERVICES P. LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2019 (5) TMI 1569 - CESTAT CHANDIGARH had occasion to analyse the very same issue. It was held that the demand to recover the amount utilized over and above 20% cannot sustain and that the assessee would be liable to pay interest for the intervening period from the date of excess utilization of credit till 01.04.2008. It was also held that penalty cannot be imposed. Thus, the demand of service tax to the tune of Rs.24,10,286/- cannot sustain and requires to be set aside. The penalties imposed also cannot sustain and are set aside. However, the appellant is liable to pay the interest on this amount from the date of utilisation of credit till 01.04.2008. Credit availed on various input services - HELD THAT - The appellant has availed credit on input services in the nature of premium paid on motor vehicle insurance, group insurance for employees, personal accident insurance for employees, life insurance etc. The other services are tour and travel and event management service (entertainment service) - prior to 01.04.2011 the credit would be eligible. It is also to be pointed out that the invoices are issued in the name of the company and the cost of such services has been borne by the company - the appellant is eligible to avail credit of Rs.7,36,922/-. Demand on this ground cannot sustain and requires to be set aside. Credit availed on the basis of debit notes - HELD THAT - As per Rule 4A of the Service Tax Rules, among other details, the service tax registration number of the service provider has to be mentioned in the invoices. The proviso to Rule 9 (2) of CCR gives discretionary power to the jurisdictional officer to condone lapses of such details in the invoices if it is clear after verification that the tax amount has been paid by the assessee. It is for the jurisdictional officer to verify as to the particulars of tax paid by the appellant to the service provider. Merely because some details are not mentioned in the invoice/document, the substantive right of credit cannot be denied. As there is no allegation in SCN as to the veracity of the document, the credit of Rs.10,67,514/- denied and confirmed by the impugned order requires to be set aside. Non-payment of Interest - levy of penalty - HELD THAT - There is no positive act of wilful suppression of facts alleged against the appellant. So also, there is no evidence established by the department to show that the appellant has suppressed facts with an intention to evade payment of tax. The only allegation is that non-payment of tax would not have come to light, if the audit party had not verified the accounts. The appellants having disclosed the availment of credit of Rs.8,69,567/- in their ST-3 returns. The penalty imposed alleging wilful suppression of facts is not justified. The same is set aside. Appeal allowed in part.
Issues Involved:
1. Wrong utilization of CENVAT credit over and above 20% of the output tax liability. 2. Credit availed on ineligible services. 3. Credit availed on the basis of debit notes. 4. Demand of Rs.8,69,567/- admitted and paid by the appellant. Summary: 1. Wrong Utilization of CENVAT Credit Over and Above 20% of Output Tax Liability: The appellant wrongly utilized CENVAT credit beyond the 20% limit prescribed under Rule 6(3)(c) of the CENVAT Credit Rules, 2004. The Tribunal noted that the restriction was omitted from 01.04.2008, and a circular clarified that accumulated credit could be utilized post-01.04.2008. The Tribunal held that the demand of Rs.24,10,286/- cannot sustain but the appellant is liable to pay interest from the date of utilization till 01.04.2008. Penalties imposed were set aside. 2. Credit Availed on Ineligible Services: The appellant availed credit on services such as motor vehicle insurance, group insurance for employees, and entertainment services. The Tribunal found that these services fall within the definition of 'input services' under Rule 2(l) of the CENVAT Credit Rules, 2004, as they were related to the business activities of the appellant. Consequently, the demand of Rs.7,36,922/- was set aside. 3. Credit Availed on the Basis of Debit Notes: The appellant availed credit based on debit notes, which the department initially contested as invalid under Rule 9 of the CENVAT Credit Rules, 2004. The Tribunal noted that if the debit notes contain necessary particulars, credit cannot be denied. The Tribunal set aside the demand of Rs.10,67,514/- as the department did not verify the veracity of the payment and failed to provide substantial evidence against the appellant. 4. Demand of Rs.8,69,567/- Admitted and Paid by the Appellant: The appellant admitted and paid the credit availed on exempted services amounting to Rs.8,69,567/-. The Tribunal upheld this demand but set aside the penalty imposed, noting that there was no evidence of willful suppression of facts by the appellant. Conclusion: The Tribunal modified the impugned order as follows: - Demand of Rs.24,10,286/- and penalty set aside; appellant to pay interest from the date of utilization till 01.04.2008. - Demand of Rs.7,36,922/- along with interest and penalty set aside. - Demand of Rs.10,67,514/- along with interest and penalty set aside. - Demand of Rs.8,69,567/- along with interest upheld; penalty set aside. The appeal was partly allowed with consequential reliefs.
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