2009 (6) TMI 97 - AT - Service Tax

Tribunal Upholds Service Tax Demand, Emphasizes Evidence for CENVAT Credit

The tribunal upheld the service tax demand against the appellant for the period in question, ruling that the mobile phones were not solely used for ... CENVAT credit on mobile phone service - the finding of the lower authorities that the mobile phones were used for both personal and business purposes was arrived at upon verification of the mobile phone bills produced by the assessee. For the benefit of CENVAT credit on mobile phone service, it is necessary that the assessee should establish that the mobile phones were used exclusively for purposes connected with their business activities or, directly or indirectly, in or in relation to the manufacture/clearance of excisable goods. - In this scenario, the evidentiary value of the mobile phone bills has also got to be examined. Unfortunately, not even a specimen copy is available on record. In the circumstances, I am constrained to observe that the appellant has failed to establish prima facie case. They have not pleaded financial hardships either. – pre-deposit of service tax directed – pre-deposit of penalty waived Issues:1. Demand of service tax on mobile phone service for the period January to July, 2005.2. Imposition of penalty equal to the service tax amount.3. Claim of CENVAT credit on mobile phone service.4. Prima facie case for full waiver of pre-deposit.Analysis:Issue 1:The lower authorities demanded service tax of Rs. 30,755 from the appellant for the period mentioned, relating to the use of mobile phone service for both personal and business purposes. The original authority concluded that the mobile phones were not solely used for business activities, leading to the confirmation of the service tax demand against the assessee. This decision was upheld by the first appellate authority.Issue 2:In addition to the service tax demand, an equal amount of penalty was imposed on the assessee. The appellant contested this penalty, arguing that the adjudicating authority's finding lacked supporting evidence. The appellant also highlighted the benefit of CENVAT credit on mobile phone service, citing a relevant Board's circular. The appellant's plea for waiver of penalty was not considered due to the lack of prima facie evidence supporting their case.Issue 3:The appellant claimed CENVAT credit on mobile phone service, emphasizing the necessity to establish that the mobile phones were used exclusively for business activities or in relation to the manufacture/clearance of excisable goods. The absence of a copy of the relevant circular and specimen copies of mobile phone bills hindered the appellant's case, leading to the directive for pre-deposit of the service tax amount within a specified timeline.Issue 4:Upon careful consideration of the submissions, the tribunal found the appellant's case lacking a strong prima facie basis for a full waiver of pre-deposit. The tribunal emphasized the importance of establishing a clear connection between the use of mobile phones and business activities to claim CENVAT credit. The appellant's failure to provide sufficient evidence or demonstrate financial hardships resulted in the directive for pre-deposit, with the possibility of waiver of penalty upon compliance.In conclusion, the judgment focused on the demand of service tax, imposition of penalty, and the appellant's claim for CENVAT credit on mobile phone service, emphasizing the need for substantiating evidence and compliance with regulatory requirements.