TaxTMI 
TaxTMI 
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
Wrongly availed cenvat credit
02 Jan 2008 
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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. (AI Summary)
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. (AI Summary)