2009 (5) TMI 53 - AT - Service Tax

Cenvat Credit Input Services Valid Documents for availing Credit - Banking & Other Financial Service - documetns do not bear Service Tax Registration No. or details of taxable service taxable value and Service Tax amount etc. and nowhere the Service Tax has been shown to have been charged to the appellants. The appellants have also not submitted before me any evidence contrary to above. They only pointed out that they have tried their level best to get the documents corrected to the effect that these should contain the Service Tax amount and the Service Tax Registration number separately but due to large number they could not do so - that even the proviso inserted to rule 4A of the Service Tax Rules 1994 vide Notification No. 30/2004-ST dated 22-9-2004 is of no help to the appellants because the crucial information and the material particulars required for availing credit of service tax are not available in the documents Credit denied.

Summary

Issues:
1. Availment of Cenvat credit without proper documentation
2. Recovery of irregularly availed Cenvat credit, penalty, and interest

Issue 1: Availment of Cenvat credit without proper documentation:
The case involved a registered service tax provider availing Cenvat credit without adequate documentary proof, leading to a show-cause notice for recovery under Cenvat Credit Rules, 2004. The Assistant Commissioner confirmed the demand, penalty, and interest, which was later partially upheld by the Commissioner (Appeals). The appellants contended that they had tried to rectify the lack of Service Tax details in documents from other banks but faced challenges due to transaction volumes. However, both authorities concluded that the documents did not fulfill the necessary requirements for availing Cenvat credit. The appellate tribunal agreed that the documents lacked essential details like Service Tax Registration No. and taxable value, making them invalid for credit purposes. The tribunal upheld the disallowance of Cenvat credit, citing non-compliance with the rules.

Issue 2: Recovery of irregularly availed Cenvat credit, penalty, and interest:
Regarding the recovery of irregularly availed Cenvat credit, penalty, and interest, the tribunal found no merit in the appellants' argument. It was established that the appellants had utilized the irregularly availed credit to pay their Service Tax liability, resulting in underpayment. The tribunal referenced Rule 14 of the Cenvat Credit Rules, 2004, which mandates the recovery of wrongly taken credit along with interest. The show-cause notice invoking relevant provisions for recovery and penalty imposition was deemed lawful. The tribunal dismissed the appellants' contentions, stating that the penalty imposition was justified under the law. In a separate appeal by the revenue, the reduction of penalty by the Commissioner (Appeals) was challenged. The tribunal upheld the reduction, considering the challenges faced by assesses in understanding Service Tax laws and the provision of section 80 of the Finance Act, 1994, allowing for penalty reduction if a reasonable cause is proven. The tribunal found the reduction of penalty within legal bounds, rejecting the revenue's appeal and upholding the Commissioner (Appeals) decision.

In conclusion, the tribunal upheld the disallowance of Cenvat credit due to inadequate documentation and supported the recovery of irregularly availed credit, penalty, and interest as per the legal provisions. The reduction of penalty by the Commissioner (Appeals) was deemed justified, considering the circumstances and challenges faced by assesses in complying with Service Tax laws.