2019 (2) TMI 681 – CESTAT HYDERABAD – TMI – Penalty u/s 77 and 78 of FA – irregular availment of CENVAT credit – additional amount of service tax which they have paid – Rule 6(3) of Service Tax Rules, 1994 – Held that:- Admittedly, the appellant made a mistake in taking credit of excess service tax paid in CENVAT account instead of taking it under Rule 6(3) of the Service Tax Rules. This mistake was pointed out by the audit specifically directing them to make the changes. They did so and filed revised returns. Under these circumstances, there are no ground whatsoever to impose any penalty upon the appellant.
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Merely entering the figures under the wrong heading in their returns with no revenue implication whatsoever and no intention to evade payment of taking duty or taking excess credit does not render the appellant liable to penalties as proposed. The entire action by the appellant was a genuine mistake which they corrected on the direction of the audit.
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Appeal allowed –
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(3) of Service Tax Rules, 1994. Instead of taking credit under Rule 6(3) of Service Tax Rules, 1994 the appellant took this excess amount of service tax paid as CENVAT credit. This mistake came to light when the appellant were subjected to audit. The Superintendent (CAAP) Audit-Gr-III vide his letter C.No. V/1/1249/2013 Audit Gr-III (CAAP) dated 17.02.2014 pointed out various observations of the audit party in para 6 of which is as follows: 6. Irregular availment of CENVAT Credit: ₹ 10,73,404/-. On scrutiny of your CENVAT credit account it is observed that you have availed cenvat credit on certain credit notes. On examination of these credit notes, and credit note ledger for the period under audit, it is observed that you have issued credit notes to various customers. Some of these credit notes are raised towards reimbursable expenditure to various port expenditures and Customs duties, wherein you are acting as pure agent. The other credit notes are issued against excess amount c
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it of such excess service tax paid by him, if the assessee,- (a) has refunded the payment or part thereof, so received along with the service tax payable thereon for the service to be provided by him to the person from whom it was received; or (b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued ; Accordingly, the appellant filed revised ST-3 returns with the Range for the relevant period deducting the amount of credit taken and utilized from CENVAT account and adding it to their Rule 6(3) account. 3. Learned Counsel draws the attention of the bench to the two returns and points out that the amounts under serial No. D2 of the ST-3 returns were reduced in the revised return and the same were taken as credit in D4 under Rule 6(3) of the Service Tax Rules. Corresponding changes have also been in entries at in E2, E4, F2 & F4 of the return. Thereafter, a show cause notice was issued to the appellant seeking to r
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one so as per the directions of the audit. Under these circumstances there is no case to recover the CENVAT credit as the amount has been already reduced by them in their revised returns prior to issue of show cause notice. Therefore, there is no case to impose penalties under CENVAT Credit Rules, 2004 or under Section 77 & 78 of the Finance Act, 1994. 5. Learned Departmental Representative reiterates the findings of the lower authority. 6. I have considered the arguments on both sides and perused the records. Admittedly, the appellant made a mistake in taking credit of excess service tax paid in CENVAT account instead of taking it under Rule 6(3) of the Service Tax Rules. This mistake was pointed out by the audit specifically directing them to make the changes. They did so and filed revised returns. Under these circumstances, I find no ground whatsoever to impose any penalty upon the appellant. It is true the credit note is not a valid document for taking CENVAT credit but they ar
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