ST - Mandap keeper - Appellant avails input credit & also claims abatement - when they came to know that credit cannot be availed they stopped taking it - appellant should have reported to Revenue - since that was not done, malafide intention is proved: CESTAT
By TIOL News Service
MUMBAI, MAY 08, 2014: THE appellant is a resort and providing various services like mandap keeper, hotel rooms, and catering service. The appellant was paying service tax as per Notification no. 21/97-ST by availing abatement of 40% of taxable amount.
The Notification no. 21/97-ST was rescinded by notfn. 02/2006-ST and a newnotification no. 1/06-ST occupied its place. As per said Notification, the appellant is not entitled to take input service credit on the services received by them to avail the benefit of abatement as per the Notification. The appellant continued to take input service credit on the services received and availed the benefit of abatement for payment of service tax. The appellant was also filing their service tax returns and showing amount of input service credit taken and benefit of the said abatement availed till October 2009.
When an audit was conducted in March 2012, it came to the notice of the department that the appellant is availing the benefit of abatement as per the said Notification as well as taking input service credit which they are not entitled to.
A SCN came to be issued demanding the input service credit availed during the period April 2007 to October 2009 by invoking extended period of limitation. Both lower authorities confirmed the demand along with interest and penalty under Section 77 and 78 of the Finance Act, 1994. ( Interestingly, the abatement was not denied! )
Aggrieved by the said order, the appellant is before the CESTAT.
It is submitted that the appellant has not hidden any fact from the dept. as they were filing their service tax returns regularly showing that they are availing input service credit on the service received and also availing the benefit of abatement as per the Notification no. 1/06 and paying service tax. And, therefore, the SCN dated 13.09.2012 invoking the extended period of limitation is not sustainable when the facts were within the knowledge of the department. The decision in Pushpam Pharmaceuticals Co. vs. CCE 2002-TIOL-235-SC-CX and Uniworth Textiles Ltd. 2013-TIOL-13-SC-CUS were relied upon.
The Revenue representative submitted that availment of credit was a deliberate act and, therefore, the demand is not hit by limitation.
The Member (Judicial) observed -
++ In this case, it is a fact of record that the appellant was availing input service credit which was not entitled during the period April 2007 to October 2009 but after October 2009, the appellant stopped availing input service credit as per Notification no. 1/06. It means that the fact of wrongful availment of Cenvat credit came in the knowledge of the appellant in October 2009 and thereafter they have stopped taking the credit.
++ If appellant was not having any malafide intention, it was a duty of the appellant that these facts would have brought in the knowledge of the department and would have been paid the service tax attributable to inadmissible input service credit voluntarily by the appellant. As this act has not been done by the appellant, therefore it amounts that appellant knowingly availed wrongful input service credit, did not reverse the credit, this act of the appellant would amount to malafide intention to avail inadmissible credit.
++ The case law relied upon by the ld. counsel states that it is to be seen the mindset of the appellant/assessee whether they have malafide intention or not? When the fact of wrongful availment of Cenvat credit came to the knowledge of the appellant and, the appellant remained silent, it shows the mindset of the appellant to avail inadmissible credit of the appellant.
Holding that the extended period of limitation is correctly invoked, the order was upheld and the appeal was dismissed.
Mindset - In passing : Making a hasty retreat !
(See 2014-TIOL-730-CESTAT-MUM)
