2016 (3) TMI 1132 - AT - Service Tax

Tribunal grants CENVAT credit, rejects penalty, and dismisses time-barred duty demand.

M.S Citizen Cooperative Bank Limited Noida Versus C.C.E, & ST NOIDA

M.S Citizen Cooperative Bank Limited Noida Versus C.C.E, & ST NOIDA - 2017 (50) S.T.R. 10 (Tri. - All.) Issues involved:1. Disclosure of CENVAT Credit entitlement in service tax return2. Disallowance of CENVAT credit on catering service for banking and financial services3. Imposition of penalty equal to CENVAT Credit disallowance4. Time-barred duty demandAnalysis:1. The first issue revolves around the non-disclosure of CENVAT Credit entitlement in the service tax return. The appellant, a Co-operative Bank Ltd., had availed CENVAT credit but failed to disclose it in the ST-3 Return for a specific period. The appellant argued that due to a clerical error and imperfect understanding, the CENVAT Credit availed details were not correctly filled in the return. The Appellate Tribunal held that the appellant should be entitled to the CENVAT credit for the period in question, emphasizing that the clerical mistake in the return should not deny the credit.2. The second issue concerns the disallowance of CENVAT credit on catering services used in providing banking and financial services by the appellant. The appellant contended that catering services were essential for customer meetings, redressing complaints, and promoting business, thus directly contributing to their output services. The Tribunal agreed with the appellant, stating that catering services are allowable as input services for the banking business, leading to customer satisfaction and business growth.3. The third issue involves the imposition of a penalty equal to the disallowed CENVAT credit amount. The Appellate Commissioner had imposed a penalty under Section 76 of the Finance Act, 1994, equal to the CENVAT Credit disallowance. The Tribunal, after considering the arguments from both sides, allowed the appeals and held that the penalty should not be increased to the disallowed CENVAT credit amount.4. The final issue pertains to the time-barred duty demand. The appellant raised the contention that the duty demand for a specific period was time-barred since the show cause notice was issued after a considerable delay. The Tribunal, after thorough consideration, held that the extended period of limitation was not applicable in the given circumstances, thereby ruling in favor of the appellant.In conclusion, the Tribunal allowed both appeals, granting the appellant the entitlement to CENVAT credit, disallowing the penalty equal to the disallowed credit amount, and rejecting the time-barred duty demand. The judgment highlights the importance of correctly disclosing credit entitlements, justifying input services, and adhering to statutory timelines in tax matters.