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2024 (1) TMI 1056 - CESTAT KOLKATADisallowance of Cenvat credit - residential telephones provided to employees - HELD THAT:- This issue is no longer res integra as the tribunal, Kolkata in the case of M/S INDIAN BANK VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [2023 (9) TMI 569 - CESTAT KOLKATA] has allowed the Cenvat Credit on telephone bills in respect of the telephones which were installed at the residence of employees - As per the definition of 'input services' during the material period, all activities relating to business should qualify as ‘input service’ within its ambit. Thus, by relying on the definition of 'input services' and the decision of the Tribunal Kolkata, it is held that the appellant is eligible for the Cenvat Credit of service tax paid on telephone bills in respect of the telephones installed at the residence of employees. Accordingly, we set aside the demand of Rs. 15,95,552/- confirmed in the impugned order. Demand pertaining to services rendered to mutual fund operators, which has already paid by the Appellant - HELD THAT:- The Appellant could not produce any evidence regarding the payment of interest for the delay in payment of this amount. Accordingly, out of the demand of Rs.21,65,286/-, the demand of Rs.15,95,552/- is set aside and the confirmation of the demand of Rs.5,69,734/- is upheld. The matter is remanded back to the adjudicating authority for the limited purpose of payment of interest for the delay in payment of this amount of service tax of Rs.5,69,734/. Demand of service tax (including Education Cess and Secondary and Higher Education Cess) of Rs. 9,60,92,082/- under Banking and other Financial Services - HELD THAT:- As a part of its normal banking activities, the Appellant invests in various government securities. Such investments in government securities are undertaken to comply with the requirements of maintaining the CRR and SLR as per the directives of Reserve Bank of India (RBI) issued from time to time. On several occasions, the Appellant purchases and sells these securities at cum-interest price. Thus, it is found that the Appellant pays and receives interest at the time of purchase and sale of securities respectively. It is observed that there is no element of service involved in purchases and sales of Govt. securities which is purely an investment activity - no service tax can be levied on interest income pertaining to investment made in Govt. securities and the demand confirmed in the impugned order on this count is liable to be set aside. Appropriation of Rs. 4,67,42,500/- against the aforesaid demand of Rs. 9,60,92,082/- - HELD THAT:- The demand itself has been held as not sustainable. Hence, the question of appropriation, if any, does not arise. Accordingly, the Appellant would be eligible for the consequential benefit of appropriation made against the said demand. Penalty imposed under Section 76 of the Finance Act, 1994 - HELD THAT:- As the delay in payments were unintentional and the Appellant always paid the service tax voluntarily with interest acting with bonafide belief, it is held that penalty imposed under Section 76 on this count is not justified. Thus, this is a fit case for invoking Section 80 of the Finance Act 1994 to waive the penalty. Therefore, the penalty imposed under Section 76 in the impugned order is set aside by invoking the provisions of Section 80 of the Finance Act, 1994. Penalty imposed under section 78 of the Finance Act, 1994 - HELD THAT:- It is observed that penalty under this Section can be imposed only under exceptional circumstances marked by fraud, collusion, willful misstatement, suppression of facts, contravention of any of the provisions of the Act or Rules, made there under with the intent to evade payment of service tax. As none of the said conditions justifying the imposition of penalty under Section 78 exists in the instant case, the penalty imposed under section 78 of the Finance Act, 1994 is not sustainable and the same is set aside. Appeal disposed off.
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