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Eligiblity of Penalty on Volunteer Service Tax Credit Reversal, Service Tax

Issue Id: - 111743
Dated: 6-4-2017
By:- Bhausaheb Gole
Eligiblity of Penalty on Volunteer Service Tax Credit Reversal

  • Contents

Dear Experts:

We are manufacturer of exciseble goods. We have taken Service Tax credit on our Input services consumed in manufacturing process. after some days we knews that in internal audit some credit are inadmisible & we reversed without utilisation,, after in Audit EA2000 it has pointed out & Auditor raise the query to pay the penalty on reversal amount,

Please advice if is there any related case laws..

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Showing Replies 1 to 15 of 16 Records

1 Dated: 6-4-2017
By:- KASTURI SETHI

Credit taken and reversed amounts to credit not taken. There are case laws. Since you did not use the same ( Having sufficient balance of credit more than that of amount involved), no interest is chargeable and no penalty is impossible. Case law will be posted today.


2 Dated: 6-4-2017
By:- MARIAPPAN GOVINDARAJAN

Once CENVAT credit is reversed on pointing out audit interest is also liable to pay by you. If CENVAT credit is reversed and interest is also paid no show cause notice is to be issued. One no SCN is issued no penalty can be imposed. This is my view.


3 Dated: 6-4-2017
By:- Bhausaheb Gole

As per my view there is no required to pay the interest on reversal amount, if it is sufficient balance of credit available in our books.


4 Dated: 6-4-2017
By:- Bhausaheb Gole

Dear Experts:

Please give the reference case laws.


5 Dated: 6-4-2017
By:- KASTURI SETHI

6 Dated: 6-4-2017
By:- KASTURI SETHI

Dear Querist,

The above case law posted by me is not relevant for you. It was relevant for some other query. It was wrongly posted. Sorry for that.

I am posting Board's Circular and two judgements of the Supreme Court on this very issue. These are as under:-


7 Dated: 7-4-2017
By:- Bhausaheb Gole

Thank you for your valuable feedback..


8 Dated: 7-4-2017
By:- KASTURI SETHI

Welcome pl. Under the auspices of TMI, experts' mission is to satisfy querists and save them from unnecessary litigation. Correct reply on this forum also saves visitors of this forum from rigours of litigation. Needless to say such number of visitors is not limited. Credit goes to TMI for creating such forum for the welfare of trade and industry.


9 Dated: 7-4-2017
By:- Gorantla Bhaskar Rao

Dear Sethi Ji,

I am regularly following your replies and found to be apt and relevant to the points raised by the querists. It enriches the knowledge of persons like me. You are doing a great service to trade fraternity and other readers. Thank u sir.


10 Dated: 7-4-2017
By:- Himansu Sha

When there is sufficient balance, there will be interest. Rule 14 has specifically mentyioned this. The phase ' availedf oir utiliused' has been replaced by ' availed and utilised'. The decision of the Hon'ble Apex Court in the case of Ind swift ltd. Was based upon the provisions of law prior to amendment. Earlier in the case of Hindustan zinc it was pronounced that no interest is payable when the credit is not utilised.

The rule has become clear with the amendments. No interest is payable if credit is not utilised.


11 Dated: 7-4-2017
By:- Himansu Sha

But rule 15 has not been amended. The word 'or' has not been replaced. Hence penalty will be imposed for wrong availment of credit even if there is no utilisation.

The decision of Ind fab has vindicated the department stand


12 Dated: 7-4-2017
By:- Himansu Sha

An amendment to my reply. In the first line it should be no interest.


13 Dated: 7-4-2017
By:- KASTURI SETHI

When we say credit reversed amounts to credit not taken, neither Rule 14 nor Rule 15 of Cenvat Credit Rules, 2004 comes into play. Regarding the literal meaning, there is no difference between 'credit taken: and 'credit availed'. Hence neither penalty nor interest is recoverable.

Rule 15 will be invoked only if Rule 14 comes into play.


14 Dated: 7-4-2017
By:- Ganeshan Kalyani

I too would like to thank TMI for having created such a wonderful platform. It brings all the likeminded together. Initially i was a querist in this forum and gradually attempted to post replies. Wherever there was any mistake in my reply, Sri Kasturi Sir would highlight it via personal message. Thanks to TMI because of which i came across such an expert.

Also i have high regards to Sri Rajagopalan Sir, Sri Mariappan Sir, Sri Sanjay Sir, Sri Akash Deep Ji, Sri Mahir S Ji and collegue experts.

I pray that all these experts and those who were active in long past should start participating in the forum and share their knowledge by resolving the queries of the querist and enrich knowledge of the onlookers.


15 Dated: 7-4-2017
By:- Bhausaheb Gole

Really it's a very big platform for us to​ resolve the queries.

Thanks to all experts​.


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