ST - Appellant is reputed Education Institute, therefore, there cannot be malafide intention for reason that there is no individual who can be benefitted by taking wrong CENVAT credit - case made out for waiver of penalty u/s 76: CESTAT
By TIOL News Service
MUMBAI, NOV 23, 2015: THE appellants,Indian Institute of Technology (IIT)are holding Service Tax Registration for rendering ‘Scientific and Technical Consultancy Services'. They had availed CENVATcredit on the inputs such as Rent-a-cab, Maintenance and Repair Service, Photography, Air Travel Agent Service, Advertising, Cable Operators, General Insurance, Custom House Agent Service, Pandal & Shamiana Service, Transport of Goods by Road etc.
Revenue took a view that these were not Input services as defined in rule 2(l) of CCR, 2004 and, therefore, the credit was inadmissible. So also, it is contended that in case of some services, it was used for exempted services on which CENVATcredit is not admissible in view of Rule 6(1) of CCR, 2004. Moreover, Appellant is not maintaining separate account for taxable and exempted services.
Various show cause notices were issued which were adjudicated by a common adjudication order. The Commissioner of Service Tax-II, Mumbai, ordered recovery of CENVATCredit ofRs.1,03,59,857/- and the same was appropriated against amount of Rs.1,04,20,262/- and interest thereupon of Rs.37,41,679/- already paid on 29/11/2010 and 31/3/2011. Penalty of Rs.2000/- under Rule 15(3) of the CCR, 2004, penalty under Section 76 and penalty of Rs.5000/- under Section 77 of Finance Act, 1994 were also imposed.
IIT, Bombay is before the CESTAT.
It is submitted that they concedethe demand of Cenvat Credit and payment thereof alongwith interest. It is further mentioned that appellant have been submitting the entire details of availment of Cenvat credit on input services and nothing was suppressed;that mistake occurred only due to accounting difficulty and there was no intention to avail undue benefit of Cenvat Credit and no malafide can be attributed; being a law abiding Government Institution, on being pointed out, the appellant paid entire amount of Cenvat Credit alongwith interest; there is no individual beneficiary in taking wrong Cenvat credit, therefore,malafide is not provedand hence penalties should not have been imposed by the Adjudicating authority in terms of Section 80 of the Finance Act, 1994.
The AR while reiterating the findings of the adjudicating authority submitted that the government institution is working in a very organized manner; they are registered since 2001 and discharging service tax regularly and, therefore, it cannot be said that the appellant are ignorant of Cenvat credit provisions, therefore, reasonable cause is not shown for waiver of penalty.
The Bench observed -
"6. Though the appeal was filed for setting aside the order but Ld. Counsel by instruction of the appellant fairly concede that they are not contesting the demand of Cenvat Credit and interest thereof which have already been paid and same was appropriated by the Adjudicating authority. Now the issue is confine to penalties imposed under various provisions. From the facts of the case, we find that the appellant M/s. IIT is reputed Technical Education Institute of Government of India, therefore, there cannot be malafide intention for the reason that there is no individual who can be benefitted by taking wrong Cenvat credit. Therefore, malafide intention does not exist. The judgments relied upon by the Ld. Counsel are all related to government agencies and penalties were dropped on this count which are applicable to the present case also. We also seen that issue involved is wrong availment of Cenvat credit due to reasons that either some of the input services were not used in the taxable output services or input services are not admissible input services in term of definition of input services. We considered that the institution is one single entity and carrying out various activities related to education as well as scientific analysis simultaneously where some of the services are taxable and some are exempted or not liable to service tax. The appellant have declared the entire Cenvat credit availed by them to the department. In view of this fact, the appellant made out fit case for waiver of penalty under Section 76 invoking Section 80 of Finance Act, 1994. However, there is failure on the part of the appellant inasmuch as they have not maintained separate account therefore they are liable for penalties under Section 77 and Rule 15(3) of CCR, 2004. Appellant on pointing out by the department paid entire Service Tax alongwith interest and now they are not disputing the same."
In fine, penalty imposed u/s 76 was waived. However, penalty u/s 77 of Finance Act, 1994 and Rule 15 (3) of CCR, 2004 were maintained. Appeal was partly allowed.
(See 2015-TIOL-2480-CESTAT-MUM)
