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2023 (8) TMI 738 - AT - Service TaxAbatement of duty - renting of motor vehicle - abatement of 60% under Sl. No. 9 of Notification No. 26/2012-ST dated 20.06.2012 or not - extended period of limitation - HELD THAT:- The issue of abatement is an indirect way of granting exemption to the extent prescribed in the statute and abatement is not normally denied on mere surmises or on any allegation of insufficient credit, considering the scheme of CENVAT Credit. But in any case, the Notification granting the benefit of abatement does not exempt wholly or partially the rate of tax and therefore, no such rigorous exercises are required to be employed, unlike in cases of exemption notifications. That is to say, the abatement Notification merely sanctifies the deduction in the assessable value of taxable services, the availment of CENVAT Credit is a caveat for eligibility to claim abatement. The Mumbai Tribunal in the case of M/s. Indian Oil Tanking Pvt. Ltd. [2017 (7) TMI 293 - CESTAT MUMBAI] has dealt with an identical issue and the Bench, after considering a catena of decisions, has held denial of abatement would be an act of encroachment by taxing sale of goods which is beyond the scope of legislative authority. To avoid such encroachment, erasure of credit is the only option. There is no allegation that such erasure has lead to deficiency of available credit at any time. Erasure would thus be substantial compliance and hence denial of abatement in the impugned order is not tenable. Coming back to the case on hand, the Assistant Commissioner records the reply of the appellant that they had reversed certain amount of CENVAT Credit by adopting the procedure given under Rule 6(3AA) (sic), but however, the same is not accepted for the reason that abatement is not exemption - it is also not found from the statute any distinction being made, as done by the adjudicating authority, but the facts borne on record clearly reflect the action in good faith by the appellant in reversing voluntarily before claiming abatement, which is the condition precedent in terms of the abatement Notification. Thus, the denial of abatement by the authorities below is not in accordance with law and consequently, they are liable to be set aside. Extended period of Limitation - HELD THAT:- The claim of abatement is, therefore, available in the S.T.-3 returns which was only sought to be denied and that per se would not amount to mis-declaration because the appellant claimed the abatement based on its understanding of the law and the authority chose to deny the same perhaps giving a different interpretation of the Notification. Hence, there cannot be any scope for mis- declaration, that too with an intention to evade payment of tax. Therefore, the demand, if any, for the normal period alone can sustain - demand is already set aside on merits. On merits, the appellant should succeed - Appeal allowed.
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