2018 (10) TMI 1074 - AT - Service Tax

Tribunal modifies penalty, grants 25% relief under Sec. 11AC. Upholds inadmissibility of CENVAT Credit for outdoor catering.

M/s Spacewood Office Solutions Pvt. Ltd. Versus Commissioner of Central Excise & Customs, Nagpur

The Tribunal partially allowed the appeal, modifying the order to grant the appellant the benefit of discharging 25% of the penalty under Section 11AC of ... CENVAT Credit - input services - outdoor catering services (canteen service) - period August, 2011 to September, 2015 - Held that:- The credit availed by the appellant on Service Tax paid on outdoor catering services during the period is not admissible - reliance placed in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III [2018 (4) TMI 149 - CESTAT BANGALORE] - credit not allowed. Benefit of reduced penalty - Held that:- The benefit to discharge 25% of the penalty is allowed subject to fulfillment of the conditions laid down under Section 11AC of the Central Excise Act, 1944. Appeal allowed in part. Issues: Admissibility of CENVAT Credit on Service Tax paid on outdoor catering services.The appeal was against an Order-in-Appeal passed by the Commissioner of Central Excise & Service Tax (Appeals), Nagpur. The main issue was whether the appellants could avail CENVAT Credit of Service Tax paid on outdoor catering services for the period August 2011 to September 2015. The learned AR for the Revenue argued that post an amendment to the definition of input service, Service Tax paid on outdoor catering services was deemed inadmissible based on a previous judgment by a larger Bench in the case of Wipro Ltd. The demand was confirmed for the extended period, and a penalty was imposed under Section 11AC of the Central Excise Act, 1944. However, the appellant was not granted the benefit to discharge 25% of the penalty.The Tribunal found that the issue of admissibility of CENVAT Credit on Service Tax paid on outdoor catering services had been settled by a Larger Bench in the case of Wipro Ltd. Following this precedent, the credit availed by the appellant was deemed not admissible. However, the Tribunal noted that the penalty imposed under Section 11AC of the Central Excise Act did not extend the benefit to discharge 25% of the penalty as per the conditions laid down in the provision. Consequently, the impugned order was modified to allow the benefit to discharge 25% of the penalty subject to fulfilling the conditions stipulated under Section 11AC of the Central Excise Act, 1944.In conclusion, the impugned order was partly allowed, and modifications were made to extend the benefit of discharging 25% of the penalty to the appellant, provided the conditions under Section 11AC of the Central Excise Act were met. The judgment clarified the inadmissibility of CENVAT Credit on Service Tax paid on outdoor catering services post an amendment to the definition of input service, as per the precedent set by a previous Larger Bench decision.