2017 (6) TMI 911 - AT - Service Tax

Tribunal overturns order, rules in favor of appellant on CENVAT credit legality.

M/s. Fraser and Ross Deloitte Centre, Anchorage-II Versus Commissioner of Service Tax-I

M/s. Fraser and Ross Deloitte Centre, Anchorage-II Versus Commissioner of Service Tax-I - TMI Issues:Appeal against rejection of appeal and imposition of penalty under Section 78 of the Finance Act by Commissioner (A) invoking extended period of limitation.Detailed Analysis:Issue 1: Rejection of Appeal and Imposition of PenaltyThe appellant, practicing Chartered Accountants, shared expenses with another occupant on a proportionate basis. The Department contended that the CENVAT credit availed by the appellant on shared expenses was wrong as the other occupant was not a service provider registered as an input service distributor. The Order-in-Original confirmed a demand with interest and penalty. The appellant argued that registration was not mandatory for availing CENVAT credit and relied on case laws to support their claim. They contended that the arrangement was cost-sharing, not liable to service tax. The appellant also argued that the demand was time-barred and penalties were not imposable. The AR supported the impugned order, while the appellant cited various decisions to counter the Department's claims.Issue 2: Legality of Availing CENVAT CreditThe appellant maintained that the impugned services were input services, and they had paid service tax to the occupant who, in turn, paid it to the service provider. They argued that registration was not mandatory for claiming CENVAT credit, citing relevant judgments. The Tribunal found no suppression on the appellant's part, as they had disclosed all facts in their ST-3 returns for the entire period. The Tribunal held that the appellant had a bona fide belief regarding the service tax registration of the occupant and the legality of availing CENVAT credit. Consequently, the impugned order was set aside, and the appeal was allowed.Conclusion:The Tribunal ruled in favor of the appellant, setting aside the impugned order rejecting the appeal and imposing penalties. The appellant's arguments regarding the legality of availing CENVAT credit, absence of suppression, and bona fide belief were accepted, leading to the decision in their favor. The judgment highlighted the importance of proper disclosure in returns and the applicability of relevant case laws in determining the legality of CENVAT credit availed by the appellant.