2012 (11) TMI 289 - AT - Service Tax

Tribunal allows appeal on Cenvat credit entitlement despite technical error in service tax registration.

The Tribunal allowed the appeal in a case concerning entitlement to Cenvat credit of service tax on CHA services. The appellant mistakenly quoted the ... Cenvat credit - appropriation of payment - technical defect in payment challan - substantial payment received by department - requirement of correct registration number for payment challans - stay against recoveryCenvat credit - technical defect in payment challan - substantial payment received by department - appropriation of payment - Quoting service tax registration number instead of excise registration number in the payment challans whether justified a fresh demand for payment despite department having received the amount - HELD THAT: - The appellant had availed Cenvat credit and, when the department questioned entitlement, reversed the credit, paid interest and 25% penalty and the amounts were received by the Government. The sole error was that the payment challans quoted the service tax registration number instead of the excise registration number. The Tribunal found that where the department has in fact received the sums due, such mis-quotation is only a technical error capable of rectification by the department and does not justify directing the assessee to pay the amounts again. Consequently, a demand for re-payment on that ground is perverse and unsustainable. The Tribunal therefore allowed the appeal and granted stay against recovery of the adjudged dues. [Paras 6, 7]Appeal allowed; departmental demand for payment again on account of wrong registration number in challans set aside and stay against recovery grantedFinal Conclusion: Where the Government has received the amounts due, mere mis-quotation of the registration number in payment challans is a technical error rectifiable by the department and does not warrant a fresh demand or re-payment; appeal allowed and recovery stayed. Issues:- Entitlement to Cenvat credit of service tax on CHA services.- Quoting service tax registration number instead of excise registration number in payment challans.- Applicability of penalty and interest in the case.Entitlement to Cenvat Credit:The appellant, a manufacturer falling under chapter 85 of the Central Excise Tariff Act, availed Cenvat credit of service tax on CHA services. The department contended that the appellant was not entitled to such credit. The appellant reversed the credit, paid interest, and a penalty even before the adjudication order was passed. Subsequently, the department confirmed the demands and directed the appellant to pay the amount again due to quoting the service tax registration number instead of the excise registration number in the payment challans. The Commissioner (Appeals) upheld this decision. The appellant argued that they had made the payments before the adjudication order, and the government had received the due amount. The Tribunal held that the appellant's error in quoting the wrong registration number was a technical issue that did not affect the payment received by the department. Therefore, the demand for repayment was deemed unsustainable, and the appeal was allowed.Quoting Wrong Registration Number:The main issue revolved around the appellant's inadvertent error of quoting the service tax registration number instead of the excise registration number in the payment challans. The appellant contended that this error did not impact the actual payment received by the department and that the demand for repayment was unjustified. The Tribunal agreed that the mistake in the registration number was a technical error that could be rectified by the department internally. The Tribunal deemed the demand for repayment based on this technicality as perverse and unsustainable in law, ultimately allowing the appeal in favor of the appellant.Applicability of Penalty and Interest:The case also involved the aspect of penalty and interest imposed on the appellant for availing the Cenvat credit of service tax on CHA services. The appellant had already paid the penalty and interest before the adjudication order was passed. The Tribunal's decision to allow the appeal indicates that the penalty and interest paid by the appellant were considered in the context of the erroneous quoting of the registration number. The Tribunal's ruling focused on the technical nature of the error and the fact that the department had received the due amount, leading to the conclusion that the demand for repayment, including penalty and interest, was unsustainable in law.This detailed analysis of the judgment highlights the issues of entitlement to Cenvat credit, the error in quoting the wrong registration number, and the applicability of penalty and interest in the context of the case. The Tribunal's decision focused on the technical nature of the error made by the appellant and emphasized that the department had received the due amount, rendering the demand for repayment unsustainable.