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2015 (2) TMI 709 - AT - Service TaxUtilisation of Cenvat credit for payment under Sec.73A(2) - Amount collected in the name of service tax on non taxable activity - Sponsorship of sporting events - Held that:- It is in this factual and legal scenario, the question whether the appellant could have utilised cenvat credit for payment of the amount envisaged in Section 73A (2) has to be considered. The said section envisaged that “where any person who has collected any amount, which is not required to be collected from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government.” Further Rule 3 of the Cenvat Credit rules, 2004 did not provide for utilisation of cenvat credit for payment of the amount specified in section 73A (2) of the Finance Act, 1994 or section 11D of the Central Excise Act, 1944. Since in the present case, the appellant was not a provider of any output service, he could not have taken any cenvat credit on the input or input services. Further he could not have utilised the credit for payment of the amount envisaged under section 73A(2). Thus, the discharge of the liability under section 73A(2) utilising cenvat credit was improper and illegal. Consequently, the demand of the department for payment of the liability under section 73A(2) of the Finance Act, 1994, in cash, is correct in law and cannot be faulted. As a consequence, the appellant is also liable to pay interest for the default period during which the amount was not made good in cash. The last issue for consideration is whether the appellant is liable to any penalty. Since the issue related to interpretation of law and there was no intention to evade or avoid payment of tax, there is no warrant to impose any penalty and accordingly, we set aside the penalty imposed on the appellant.Since the appellant has subsequently paid the amount in cash, the appellant would be entitled to restoration of credit which was debited from the cenvat account subject to the condition that the appellant does not claim any refund of the amount paid in cash. Decided against the appellant.
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