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TMI Blog2014 (10) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... of service in respect of the services notified for the purpose. 2.2 The bank has obtained centralized registration in respect of all its branches and offices situated across the country. The information is collected from the branches and offices and the taxes are paid accordingly. During the course of audit, it was observed that the bank had utilised the CENVAT credit in excess of 20% for payment of output tax. Further, it was observed that bank has wrongly classified certain services as the services falling u/r 6(5) of the CCR and thereby availing credit of 100% of the same. The period involved in respect of this issue is October 2005 to March 2008. Further, it has also been alleged that there was short payment u/r 6(3)(ii) of the CCR on account of alleged wrong classification of the services u/r 6(5). The period involved in respect of this issue is April 2008 to March 2010. Extended period has also been invoked by alleging willful suppression of fact with intend to evade tax. 2.3 The related show-cause notice was issued purely based on the observations of the audit team. The appellant gave a detailed reply and also appeared in person and submitted various arguments to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 20% of CENVAT credit. Two periods were examined by us and in both the cases, we found that the amount of credit utilized by the appellants come to exactly 20%, if the claim of the appellant for method of calculation is accepted. The details are as under: M.R.V. Krishna & Co. Chartered Accountants Date : 20.02.2013 TO WHOMSOEVER IT MAY CONCERN We have examined the internal records of M/s. Canada Bank having its Head Office at No. 112, JC Road, Bangalore - 560 002 for the period April 2005 to September 2006. Month Actual Service Tax Liability CENVAT Credit utilized Balance payable Cash Paid CENVAT Credit Opening Balance Paid during the month Total paid Adjusted towards liability Adjusted Excess payment carried over Opening Balance Actual credit Availed utilised in respect of Rule 6(5) items utilised in respect of other items Total utilised Closing Balance (1) (2) (3)=(14) (4)=(2-3) (5) (6) (7)=(5+6) (8)=(4) (9)=(7-8) (10) (11) (12) (13) (14)=(12+13) (15)=(10+11-14) Oct'05 4 50 37 542 93 75 763 3 56 61 779 1 00 09 844 3 49 68 962 4 49 78 806 3 56 61 779 93 17 027 1 03 44 067 3 68 255 90 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 610 We have verified the above statements with the Service Tax Return (ST 3) returns filed by the bank. We hereby certify that the Service Tax liability (co. no. 2), the cash paid during the month (Col no. 6), CENVAT credit Availed (Col no. 11) and the opening balance of Rs. 1,00,09,844/- (Col No. 5) in Oct 2005 month shown in the above statement are correct as per ST3 returns filed by the bank for the half years Mar 2006 & Sept 2006. For MRV KRISHNA & CO Chartered Accountants (R.K. SENTHIL KUMAR) Partner M No. 029870 Firm Regn No.: 0016425 3.2 It is the claim of the appellant that CENVAT Credit utilized in Col. 3 has to be calculated by deducting the CENVAT credit in respect of Rule 6(5) items. When such a calculation is made on that basis, as observed by us, the percentage comes to 20% only. When we consider that the entire demand is time barred and we take note of the fact that appellants calculated the amount correctly, what emerges is the fact that the appellants definitely entertained a bona fide belief. In any case, as submitted by the learned CA, if a six months period is taken instead of monthly basis, even this would not arise. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to take note of the fact that the audit observation was based on 1% of the samples and there is no clear finding that these are not common input services. Instead it appears that Department is attempting reclassification of the input services to arrive at this conclusion. 4. Even though we could have remanded the matter back so that the invoices could be verified once again and the appellant is required to produce a proper CA certificate on the basis of random sampling, it would have resulted in further litigation, further adjudication process and additional work for both the sides. Having regard to the fact that the CA certificate covers more than 50% of the invoices in respect of one year and 80% in case of another year, we consider that there is no harm if we hold that the appellants at least have taken the credit on the basis of classification in invoices correctly since no discrepancy has been found by CA and further these very same invoices had been produced to the Department in the form of a softcopy and there is no finding that any verification has been done with the help of softcopy. Therefore, we made a suggestion to the learned CA on 26.5.2014 that if the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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