Eligiblity of Penalty on Volunteer Service Tax Credit Reversal

[Bhausaheb Gole]

Dear Experts:

We are manufacturer of exciseble goods. We have taken Service Tax credit on our Input services consumed in manufacturing process. after some days we knews that in internal audit some credit are inadmisible & we reversed without utilisation,, after in Audit EA2000 it has pointed out & Auditor raise the query to pay the penalty on reversal amount,

Please advice if is there any related case laws..

AI Summary

Debate on Penalties for Reversing Unused Service Tax Credits: Insights on CENVAT Rules and Case Law Interpretations A manufacturer of excisable goods sought advice on whether a penalty is applicable for reversing inadmissible Service Tax credits without utilization. An auditor had flagged this issue during an EA2000 audit. Experts in the forum provided differing views: some argued that reversing unused credits means no penalty or interest should apply, citing case laws and Supreme Court judgments. Others suggested interest might be due if credits are reversed after an audit. The discussion highlighted the importance of understanding CENVAT credit rules and amendments, with participants expressing gratitude for the platform's role in facilitating knowledge sharing.