2015 (11) TMI 1347 - AT - Service Tax

Appeal Success: Waived Section 76 Penalties, Upheld Section 77 Penalties - Lessons in Tax Compliance

M/s INDIAN INSTITUTE OF TECHNOLOGY (IIT), MUMBAI Versus COMMISSIONER OF SERVICE TAX-II, MUMBAI

The Tribunal partially allowed the appeal by a Government Technical Educational Institution, waiving penalties under Section 76 but upholding penalties ... Waiver of penalty - Cenvat credit - Credit availed for both exempted and non exempted services - Non maintenance of separate accounts - Held that:- Appellant M/s. IIT is reputed Technical Education Institute of Government of India, therefore, there cannot be malafide intention for the reason that there is no individual who can be benefitted by taking wrong Cenvat credit. Therefore, malafide intention does not exist. - issue involved is wrong availment of Cenvat credit due to reasons that either some of the input services were not used in the taxable output services or input services are not admissible input services in term of definition of input services. We considered that the institution is one single entity and carrying out various activities related to education as well as scientific analysis simultaneously where some of the services are taxable and some are exempted or not liable to service tax. The appellant have declared the entire Cenvat credit availed by them to the department. In view of this fact, the appellant made out fit case for waiver of penalty under Section 76 invoking Section 80 of Finance Act, 1994 - However, penalty on Section 77 is upheld - Decided partly in favour of assessee. Issues:1. Recovery of Cenvat Credit amount and penalties imposed under various provisions.Analysis:The judgment pertains to an appeal against an Order-in-Original passed by the Commissioner of Service Tax-II, Mumbai, directing the recovery of Cenvat Credit amount and imposing penalties under different sections. The appellant, a reputed Government Technical Educational Institution, availed Cenvat credit on various input services without maintaining separate accounts for taxable and exempted services. The Revenue contended that some input services were not used for providing output services or were used for exempted services, making the Cenvat credit inadmissible. The appellant conceded to the demand of Cenvat Credit and interest payment but sought the waiver of penalties. The appellant argued that the mistake was due to accounting difficulties, not intentional, and that they promptly paid the entire amount upon discovery. They emphasized their compliance history and the absence of individual beneficiaries from the wrong Cenvat credit. The Revenue argued against waiving penalties, citing the organized nature of the institution and their long-standing registration. The Tribunal considered the submissions and found no malafide intention on the part of the appellant, given their status as a government institution. The Tribunal noted that the appellant disclosed all availed Cenvat credit to the department. While waiving the penalty under Section 76, the Tribunal upheld the penalties under Section 77 of the Finance Act, 1994, and Rule 15(3) of CCR, 2004, due to the failure to maintain separate accounts. The Tribunal partially allowed the appeal, maintaining some penalties while waiving others, based on the circumstances and legal provisions.This judgment highlights the importance of maintaining proper accounts for availed credits and the consequences of not doing so, even in cases where there is no malafide intention. It underscores the significance of disclosure and cooperation in resolving tax-related issues. The Tribunal's decision to waive certain penalties while upholding others demonstrates a balanced approach considering the appellant's circumstances as a government institution.