Availability of Abatement when credit with interest reversed

PJ/Case Laws/2012-13/1051

Case: AJITNATH TOURS & TRAVELS Vs COMMISSIONER OF SERVICE TAX AHMEDABAD

Citation: 2010-TIOL-1574-CESTAT-AHM

Issue:- Rent-a-cab service – Benefit of Abatement will be available if assessee reverses cenvat credit with interest.

Brief Facts:- Appellant is providing services of "Rent-a-Cab" and they are discharging their service tax liability regularly after availing abatement permitted. Appellant had procured a vehicle bbearing No. GJ-BT-9855 from M/s, Parswanath Tourist Service for supplying on hire to one Dr. Rarneshbhai Shah from 18.1,2008 to 29.1.2008. The said M/s. Parswanath Tourist Service had charged a total amount of Rs. 65,000/-including service tax, education cess and S.H.C. of Rs. 3,026/- was paid in cash by appellant to the said M/s. Parswanath Tourist Service for providing the said vehicle. The appellant had provided the said vehicle to Dr. Rameshhhai Shah from 18.1.2008 to 29.1.2008 on consideration of Rs. 1,04,400/-. Thus, service tax payable on 40% after calculating abatement of 60% on the said amount of Rs. 1,04,400/- works out to Rs. 5,178/-. However, while calculating service tax payment, appellant's clerk adjusted the said amount of Rs. 3,026/- against the total liability and remaining amount was paid in cash for the period from 01.4.2008 to 30.09.2008 and filed ST-3 return.

Thereafter, show cause notice was issued on 17.4.2009 proposing to deny the benefit of abatement availed by appellant under Notification No. 01/2006-ST for the entire period from 01.04.2008 to 30.09.2008 and service tax of Rs. 19,070/- was demanded.

The Adjudicating Authority confirmed the demand for service tax and imposed penalty. In appeal, the Commissioner (Appeal) upheld the demand of service but set aside the penalty imposed by the Original Adjudicating Authority.

Appellant are in appeal before the Tribunal.

Appellant’s Contention:- Appellant submitted that similar issue has been dealt with by the Tribunal before and it was held that benefit of abatement will be available if credit is reversed with interest. The following cases are relied upon:

- Skyline Builders - 2010 (17) STR 436 (Tri. Bang.)

- Face Ceramics Pvt. Ltd. - 2010 (249) ELT 119 (Tri. Ahmd.)

Respondent’s Contention:- Revenue fairly agrees that precedent decisions cited by the appellant cover the issue before the Tribunal.

Reasoning of Judgment:- The Tribunal found that the appellants has paid the amount of credit taken in cash along with interest. The precedent decisions cited by them also are on the same line that if the credit is reversed with interest, benefit of abatement available in the Notification can be extended. Demand of service tax set aside.

Decision:- Appeal allowed.

Comment:- Even the Apex Court has held in case of Chandrapur Magnet Wires Private Limited [1996(81)ELT 3 (SC)] that the reversal of cenvat credit will mean not taking of credit. Following the same analogy when the assessee has reversed the Cenvat credit then it will be termed as non taking of credit and hence the abatement will be available to them. We have also come across such decision and adjudication officer has dropped the proceedings against us but the department has filed the appeal in Commissioner (Appeal). It has been seen now-a-days that every dispute is not settled before CESTAT.

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PJ/Case Laws/2012-13/1051

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