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2018 (12) TMI 343 - AT - Service TaxPenalty u/s 78(1) of the Finance Act, 1994 read with Rule 15(3) of the Cenvat Credit Rules 2004 - incorrectly availed CENVAT Credit - suppression of material fact - EA audit-2000 was conducted where credit was denied - Held that:- Admittedly there is no mechanism available for determination of admissibility of cenvat credit in the self assessment era for which EA audit 2000 procedure has assumed its importance. Statutory audit procedure - Held that:- It cannot be said that only because audit party had found non-observance of partial reverse charge mechanism procedure in respect of certain services, without any reference to the categorising of service provider, appellant is to be tested for suppression etc. Time Limitation - Held that:- The audit is a process which is carried on upwards from the last financial year audited till the last completed financial year preceding the date of audit which is contrary to the provision of Section 73(1) whereby if any fraud collusion, misstatement or suppression is noticed by the department, while processing a return or investigating a firm, the respondent department can go up to five years and serve show-cause to justify tax liability - In the instant case, show-cause was issued on 03.02.2017 calling for imposition of penalty under Section 78 for irregularity found in the financial year 2012-15. It is not understood as to what irregularity was noticed by the respondent department between 01.04.2015 to 03.02.2017, comprising of a period of 23 months to invoke extended period jurisdiction and go back to financial year starting from March 2015 to April 2012. The irregularity as found in EA audit vis a vis prompt payment of service tax and subsequent payment of penalty in conformity to Section 78 (B), the confirmation of penalty under Section 78 is uncalled for - appeal allowed - decided in favor of appellant.
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