2013 (11) TMI 353 - AT - Service Tax

Waiver granted for ineligible cenvat credits under Tax Rules and Finance Act

The Tribunal allowed the waiver of pre-deposit of ineligible cenvat credit amounts confirmed under Rule 6(3) of Cenvat Credit Rules, 2004 and proviso to ... Waiver of pre deposit - CENVAT credit - Held that:- invoices raised by IHCL specifically states that service tax liability has been discharged by them under Section 65 (105) (r) of the Finance Act, 1994. On perusal of the said sub Section, we find that the category indicated is Management Consultancy Services which is the category on which 100% tax paid is allowed as credit to the assessee. We also find strong force in the contentions raised by the learned counsel that the stay order in the case of M/s. Newlight Hotels and Resorts Limited deals with an identical issue. Since this Bench has already taken a view on an identical issue, respectfully following the same, we hold that the appellant has made out a prima-facie strong case for the waiver of pre-deposit of the amounts involved - stay granted. Issues:Waiver of pre-deposit of ineligible cenvat credit amounts confirmed under Rule 6(3) of Cenvat Credit Rules, 2004 and proviso to Section 73(1) of Finance Act, 1994, along with interest, penalties, and penalties under various acts of Finance Act, 1994.Analysis:1. Confirmation of Ineligible Cenvat Credit:The stay petitions were filed seeking the waiver of pre-deposit of amounts confirmed as ineligible cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004 and proviso to Section 73(1) of Finance Act, 1994. The amounts in question were availed by the appellants on service tax paid under 'Management and Business Consultancy Services' and utilized in total, contrary to the permissible utilization limit. The adjudicating authority confirmed the ineligibility of the cenvat credit.2. Contentions and Submissions:The appellant's counsel argued that the service tax liability under 'Management Consultancy Services' had been discharged by M/s. Indian Hotels Company Limited (IHCL) as indicated in the invoices. It was contended that under Rule 6(5) of Cenvat Credit Rules, 2004, the entire credit could be utilized for discharging the service tax liability. Reference was made to a previous decision involving a similar issue where the Bench granted unconditional waiver, citing a precedent decision.3. Departmental Representative's Stand:The departmental representative reiterated the findings of the lower authorities, presumably supporting the confirmation of ineligibility of the cenvat credit.4. Judicial Analysis and Decision:Upon careful consideration of the submissions and perusal of the records, the Tribunal noted that the invoices clearly stated that the service tax liability had been discharged under 'Management Consultancy Services,' which allowed 100% tax paid as credit to the assessee. The Tribunal found merit in the appellant's contentions and referenced a previous decision by the same Bench on an identical issue, where an unconditional waiver was granted. Consequently, the Tribunal held that the appellant had established a prima facie strong case for the waiver of pre-deposit of the amounts involved. Therefore, the applications for waiver were allowed, and recovery was stayed pending the disposal of appeals.This judgment highlights the importance of proper utilization of cenvat credit and the significance of documentary evidence, such as invoices, in establishing the discharge of tax liabilities. It also underscores the relevance of precedent decisions in shaping outcomes in similar cases before the Tribunal.