M/S Globe Automobile Pvt. Ltd vs C.C.E., & S.T., Chandigarh
- Case No.Appeal No. ST/51904/2015
Ratio decidendi
The rule this decision rests on
Credit of service tax paid on an input service is not available under the Cenvat Credit Rules where the service was availed before the assessee began providing the output service, since an input service is defined as one used for providing an output service and the output service had not yet commenced. Where the assessee has deposited the wrongly availed credit together with interest before adjudication, a penalty for wrongful availment of credit may be reduced to 25% of the duty demanded, the tribunal being satisfied that the reduction meets the ends of justice notwithstanding its rejection of the plea that the wrong availment was a bona fide mistake by a new assessee.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Pronouncement: 29/09/2015
Appeal No. ST/51904/2015
(Arising out of OIA No. JAL-EXCUS-000-APP-240-14-15 dated 30/12/2014 passed by the Commissioner (Appeals) Central Excise, Chandigarh-II)
1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of the order?
4. Whether order is to be circulated to the Department Authorities?
M/s Globe Automobile Pvt. Ltd. Appellant
Vs.
C.C.E., & S.T., Chandigarh Respondent
Appearance:
Present for the Appellant: None, Shri Gagan Kohli, Advocate
Present for the Respondent: Shri R.K. Gupta, DR
Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)
Final Order No.52992/2015
Per: Sulekha Beevi C.S.
The appeal is filed against the order disallowing the credit on
Renting of Immovable Property service availed for the period prior to taking of registration.
2. The appellant is registered for providing services of Authorized Service Station and Business Auxiliary Services. During the course of audit for the period 2007-08 it was observed that appellant had wrongly taken Cenvat credit of Rs.1,73,020/- on Renting of Immovable Property Service on invoices issued prior to taking of registration by appellant as service provider for authorized service station. A show cause notice dated 22.4.2013 was issued which culminated in the Order-in-Original which confirmed the disallowance of credit and ordered recovery of tax along with interest and also imposed equal amount of penalty besides penalty of Rs.2000/- under Rule 15(3) of the Cenvat Credit Rules. After issuance of the Order-in-Original the appellant deposited the amount of credit availed alongwith interest. In appeal, the Commissioner (Appeals) taking into account of the fact that appellant has deposited the tax with interest waived the penalty of Rs.2000/- imposed under Rule 15(3) but upheld the rest. Aggrieved the appellant is before the Tribunal.
3. It is not disputed that appellant took service tax registration for Authorized Service Station only on 28.03.2008. The premises for running the service station was taken on rent prior to taking registration. Appellant availed credit for the rent paid during the period prior to taking registration and prior to providing output services by the authorized service station. It is submitted by the learned counsel for appellant that the first invoice of authorized service station was issued on 7.9.2008. These dates demonstrate that credit was availed for the tax paid on the input service prior to providing output service. Rule 2 (l) of the Cenvat Credit Rules define input service as any service used by a provider of taxable service for providing an out put service. When the appellant has started providing output service only on 7.9.2008, renting of immovable property prior to 7.9.2008 is not eligible for credit. The credit, in my view has been rightly denied.
4. The learned counsel vehemently argued that the demand is time barred and that extended period is not invokable as there is no suppression of facts or willful misstatement with intention to evade payment of duty. The learned DR submitted that the wrong availment of credit was brought out only during audit on 13.9.2012. Thus the suppression of facts with intention to evade duty is clear and therefore imposition of penalty is legal and proper. The learned counsel submitted that during the relevant period the appellant was a new assessee who started the authorized service station and took registration. He submitted that credit was availed only due to ignorance. He argued for full waiver of penalty as there was no intention on the part of appellant to evade duty and it was only a mistake being a new assessee. I am not convinced by these arguments. However, taking into consideration the fact that the appellant has deposited service tax of Rs.1,73,020/- alongwith interest of Rs.1,90,956/- on 16.01.2014, I am of the view that reducing the penalty to 25% is necessary to meet the ends of justice.
5. In view thereof, the impugned order is modified to the extent of reducing the penalty imposed to 25% of the duty demand (i.e. 1,73,020/-). The appeal is partly allowed in above terms.
(Pronounced on 29/09/2015)
(Sulekha Beevi C.S.)
Member (Judicial)
K. Gupta
4
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