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2023 (6) TMI 1056 - AT - Service TaxLevy of Service Tax alongwith interest and penalties - Late Payment Charges collected - non-reversal of Cenvat credit under Rule 6 of Cenvat Credit Rules - Trading of Scrips on own account - reimbursement expenses - levy of penalties. Late Payment charges - HELD THAT:- The decision of the Tribunal in the case of South Eastern Coalfields Ltd [2020 (12) TMI 912 - CESTAT NEW DELHI] cited by the Appellant is squarely applicable in this case where it was held that any penal charges recovered for non-performance of contractual obligation cannot be said to be towards rendition of declared service under Section 66E(e) of the Finance Act, 1994 - the demand confirmed in the impugned order on Late Payment Charges amounting to Rs 5,09,45,857/- is not sustainable. Credit reversal under Rule 6 of Credit Rules - imposition of Penalty of Rs.34,443/- and Rs 1390/- - HELD THAT:- The Appellant has not contested the issue. They have deposited the tax amount along with interest before issue of the Notice - there was no case of fraud or willful suppression established in the findings by the adjudicating authority. Since the entire amount of taxalong with interest has been deposited well before the issuance of the Show Cause Notice, the Notice need not have been issued as per Section 73(3) of the Finance Act, 1994. Therefore, the penalties of Rs.34,443/- and 1390/- imposed in the impugned order is liable to be set aside - the same is set aside. Demand of Service Tax of Rs.20,14,912/- along with interest and penalty under Rule 6 of Credit Rules - Appellant has engaged himself in trading of scrips on their own account, which is an exempted service - HELD THAT:- The reversal of proportional credit under Rule 6 has been settled by the Hon‟ble Telangana High Court in the case of M/S TIARA ADVERTISING VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] wherein it has been held that the Department cannot raise the demand of the amount exceeding the proportionate reversal pertaining to the common input services. Rule 6(3) of the Credit Rules merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. Thus, when common input services are used in dutiable and exempted services, the Appellant are entitled to reverse the proportional credit attributable to exempted services. Accordingly, the Appellant has rightly reversed the proportional credit along with interest. Hence, the Notice need not have been issued under Section 73(3) of the Finance Act, 1994.Accordingly, we hold that penalty equivalent to the amount paid is not imposable in this case, as there is no findings of any suppression of fact available in the impugned order. Service tax demand of Rs.17,72,562/- on account of reimbursement of expenses from group companies on cost sharing basis - HELD THAT:- Reliance placed in the decision of Hon'ble Supreme Court in the case of Gujarat State Fertilizers Vs Commissioner of C.Ex. [2016 (12) TMI 103 - SUPREME COURT] and decision of the Tribunal in the case of Historic Resort Hotels Pvt. Ltd Vs CCE, Jaipur-II [2017 (9) TMI 1066 - CESTAT NEW DELHI], wherein it has been held that reimbursements claimed from various group companies on cost sharing basis cannot be said to be towards provision of any taxable service - This view has been taken by Tribunal Kolkata in the case of Haldiram Marketing Pvt Lts Vs Commissioner [2023 (2) TMI 783 - CESTAT NEW DELHI] - It is observed that the Ld. Commissioner has not given any finding with regard to the submissions of various decisions of the Tribunal in the impugned order - the demand on this issue is not sustainable. Penalties on above demands - HELD THAT:- There is no fraud or collusion or suppression of fact involved in this case. Hence, the penalty is not imposable in this case. They place reliance on the decision of the Tribunal, New Delhi, in the case of Vandana Global Vs. Commissioner (Appeals), CGST, Raipur [2022 (12) TMI 450 - CESTAT NEW DELHI] - It is observed that there is no suppression of fact findings by the adjudicating authority in the impugned order. In view of the above decisions, it is held that the penalties imposed in the impugned orders are not sustainable. Appeal allowed in part.
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