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2014 (1) TMI 999 - AT - Service TaxWaiver of pre deposit - input service distributor (ISD) - Penalty imposed under Rule 15 (2) of the Central Excise Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - Held that - For availing cenvat credit when invoices are raised in favour of the Head Office or Circle Office and payments for such services were made from the said Office and services are claimed to have been used in exchanges under the Head Office/Circle Office, it is required to get the Head Office/Circle Office registered as input service distributor and issue invoices in favour of its units/exchanges. Admittedly,the applicant s Circle Office has not been registered as input credit distributor under the said Rules and prima-facie, we find that the cenvat credit has not been availed correctly as per the procedure as laid down by the Cenvat Credit Rules, 2004. In these circumstances, the applicant failed to make out a prima-facie case for total waiver of predeposit of all dues adjudged against them - Partial stay granted.
Issues: Application for waiver of predeposit of service tax and penalty under Rule 15(2) of Central Excise Rules, 2004.
Analysis: - The appellant sought waiver of predeposit of service tax of Rs.2.06 Crores and penalty imposed under Rule 15(2) of the Central Excise Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. - The appellant's consultant argued that a significant portion of the amount pertained to availing cenvat credit on invoices favoring the Head Office/Circle Office, which were used at different telephone exchanges under the Circle Office. However, the Head Office/Circle Office was not registered as an input service distributor under the Cenvat Credit Rules, 2004, at the relevant time. - The Department's representative contended that the appellant did not adhere to the prescribed procedures under the Cenvat Credit Rules, 2004, for claiming cenvat credit on various input services used in the telephone exchanges. - The Tribunal observed that to claim cenvat credit when invoices are issued in favor of the Head Office/Circle Office and services are used in exchanges under the same, the Head Office/Circle Office must be registered as an 'input service distributor' and issue invoices to its units/exchanges. As the appellant's Circle Office was not registered as an 'input credit distributor,' the cenvat credit was not availed correctly as per the prescribed procedure. - Consequently, the Tribunal found that the appellant failed to establish a prima facie case for a total waiver of predeposit. However, considering the ends of justice, the Tribunal directed the appellant to deposit Rs.20.00 lakhs within eight weeks, failing which the appeal would be dismissed without further notice. Upon depositing the specified amount, the balance dues would be waived, and recovery stayed during the appeal's pendency. This detailed analysis of the judgment addresses the issues involved in the application for waiver of predeposit of service tax and penalty, outlining the arguments presented by both parties and the Tribunal's decision based on the compliance with the Cenvat Credit Rules, 2004.
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