Wrongly availed cenvat credit

[OM PRAKASH]

CENVAT CREDIT WRONGLY TAKEN WHILE AVAILING 50% ABATENMENT UNDER NOTF.1/2006. CAN THE AUDIT WING OF SERV. TAX DISSALLOW THE ABATEMENT? POSSIBLE LIAB. 22 LACS, CENVAT CREDIT 70,OOO

[sudhir V S]

Dear Mr. Om prakash, The best way to get out of the issue would be revesal/payment of service tax along with the interest of 13% p.a. once the service tax has been paid the benifit under notification 1/2006 should not be denied in my view

I accept the below view also if you pay service before audit with interest you may be not penalised for voluntrly payment, also see that revised return should be filed with in due date as per recent notification/circular.

AI Summary

Cenvat credit misclaim risks abatement disallowance; timely payment with interest and revised return can mitigate penalties
Wrongly availed CENVAT credit alongside claiming abatement under Notification 1/2006 can prompt audit disallowance of the abatement and corresponding service tax liability. The recommended remedial steps are reversal of the credit, payment of the service tax with interest, and filing a revised return; voluntary payment before audit may limit penal exposure under the relevant notification or circular.