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2016 (6) TMI 622 - AT - Service TaxBanking and Financial Service - eligibility of cenvat credit before seeking registgration - bonafide belief that the activities were not subject to service tax - Extended period of limitation - Held that:- adjudicating authority himself has accepted that the appellants were advised by their statutory auditors that services rendered by them attract service tax and that they thereon obtained service tax registration on 08-06-2009. It is also not in dispute that the appellant, pursuant to scrutiny of records by department in August 2009, but well before the issue of the show cause notice on 24-04-2010, had worked out their service tax liability for the period December, 2004 to August, 2009 as being ₹ 3,77,37,965/-, and had partly discharged the said liability by adjustment of ₹ 2,21,20,238/- from Cenvat credit and balance of ₹ 1,56,17,727 along with interest liability thereof ₹ 27,09,290/- total ₹ 1,83,27,017/- was paid by them by GAR-7 Challan dated 17-09-2009. The department has demanded a slightly higher tax liability, for the same period, of ₹ 3,89,86,389/- along with interest thereon. Cenvat Credit - appellant was entitled to avail Cenvat credit on documents evidencing receipt of eligible inputs, capital goods or input services , even before the date they obtained service tax registration. They can very well adjust part or whole of their service tax liability by utilization of such credit availed, subject to the relied upon invoices/ documents evidencing sufferance of tax/duty found to be otherwise eligible for such availment pe se for the purposes of Cenvat Credit Rules, 2004. There is no justification for equal penalty under section 78 of the Finance Act, 1994; the same requires to be set aside, which we hereby do. We however do not interfere with the penalties imposed under Sections 76 and 77(1) (a) ibid. - Decided partly in favor of assessee.
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