2008 (2) TMI 86

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..... ; under Section 75 of the Finance Act, and imposed penalties@ Rs,100/- per day  under Section 76 of the said Act and of Rs.17,528/- under Rule 15 of the Cenvat Credit Rules, 2004. 2. The facts of the case briefly stated are these. The appellant is a tour operator.  For the tour operator services provided by it from April to September 2004 it availed service tax credit amounting to Rs.17,528/- on mobile phones under rule 3(6) of the Service Tax Credit Rules, 2002. On 4.7.2005 a show cause notice was issued to the appellant for proposed recovery of the said amount and imposition of penalties.  The appellant claimed that it was providing output service from mobile phones and rendering the same service as is rendered from teleph .....

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..... of credits, and there is no provision pari materia to rule 3(6) of the Service Tax Credit Rules therein. The question as to whether any output service provided from mobile phone thereafter would qualify for service tax credit, therefore, does not arise. The question is whether for the period prior to 10.9.2004 any service provided as output service from mobile phone is entitled to claim service tax credit. 5. On behalf of the Revenue my attention was drawn to para 2.8 of the Circular of the Central Board of Excise & Customs (CBEC)  No.59/8/03-ST dated 20.6.2003 and it may be useful to quote the same verbatim as under  :- "In regard to credit of service tax on telephone connection, queries have been raised as to whether service .....

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..... f the entitlement or denial thereof and where any person is held not entitled to claim service tax credit, it will follow that he was liable to pay service tax, and that being the position, it cannot claim any advantage in the matter of liability to pay service tax under Section 76. 7. Counsel submitted that penalty under Section 76 may be waived as the appellant was misled into believing that it was entitled to claim the service tax credit.  It was submitted that Section 80 provides for such waiver if there is a reasonable cause for failure to pay the service tax.  I have considered the submission of the counsel, but having regard to the unambiguous language in the statute, I am unable to accept the same.  As observed above .....

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