Grace Infraventures Private Limited Vs Commissioner (CESTAT Allahabad)
The appeal challenged the Order-in-Appeal dated 25.04.2024, which had set aside the Order-in-Original and confirmed a service tax demand of ₹1,25,775 along with interest, disallowed CENVAT Credit of ₹33,16,333, and imposed penalties under Section 78 of the Finance Act, 1994 and Rule 15 of the CENVAT Credit Rules, 2004.
The dispute originated from a Show Cause Notice issued on 30.12.2020 for the financial years 2015-16 to 2017-18, proposing recovery of service tax under the proviso to Section 73(1) of the Finance Act, 1994, recovery of allegedly wrongly availed CENVAT Credit under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73(1), recovery of interest under Section 75, and imposition of penalties under Sections 77 and 78 of the Finance Act, 1994 and Rule 15 of the CENVAT Credit Rules.
The appellant contended that the penalty under Section 78 had been wrongly imposed despite payment of service tax and interest, that the disallowance of CENVAT Credit relating to cancelled commercial space bookings was incorrect and based on an erroneous interpretation of Rule 6(3) of the Service Tax Rules, 1994, and that the Show Cause Notice was barred by limitation.
The Tribunal noted that the appellant had deposited the confirmed service tax of ₹1,25,775 together with interest of ₹81,752, and part of the penalty had also been deposited and appropriated. It further observed that the CENVAT Credit had been claimed in an incorrect column of the ST-3 return, although the credit had been disclosed in the returns.
