Case Law Details
Aswani Industries Pvt Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
CESTAT find that since there is no intention of the appellant to evade any duty as the appellant have discharged the service tax and utilized the same though incorrectly but it was a revenue neutral situation as the appellant is otherwise entitled for the refund of the same amount. Hence, in absence of any mala fide penalty under section 78 is not imposable. Therefore, the penalty imposed under section 78 is set aside.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant have discharged the service tax liability under reverse charge mechanism on 13.07.2017 vide challan in the month of June, 2017. The appellant have claimed cenvat credit shown in the return of June, 2017 and the same was utilized for payment of duty in the month of June, 2017. The case of the department is that since the appellant have paid the service tax on reverse charge mechanism on 13.07.2017, the same was not available as cenvat credit as on 30.06.2017. Therefore the said credit could not have been adjusted towards the payment of duty for the month of June, 2017. Accordingly, the show cause notice was issued and the same was adjudicated by the Adjudicating Authority whereby the demand of cenvat credit was confirmed along with demand of interest and equal penalty. Being aggrieved by the Order-In-Original the appellant filed the appeal before the Commissioner (Appeals) who vide Order-In-Appeal upheld the Order-In-Original and rejected the appeal. Therefore, the present appeal filed by the appellant before this Tribunal.
2. Shri Mukund Chauhan, Learned Counsel appearing on behalf of the appellant submits that though the service tax was paid on 13.07.2017 the same was pertaining to the period June, 2017 therefore, the same was rightly adjusted against the duty liability of June, 2017. He further submits that the board also issued the Circular No. 207/5/2017-ST dated 28.09.2017 which clarified that due to the introduction of GST from 01.07.2017 the assessee was allowed to file return for June 2017 by 3 1.08.2017. For this reason also the service tax paid by the appellant even though in the month of July was available for adjustment against the duty payment of June, 2017. He also takes support from the judgment of this Tribunal in the case of SURYA PHARMACEUTICALS LTD. Vs. COMMISSIONER OF C. EX, CHANDIGARH-II – 2016 (43) STR 479 (Tri. Chennai ) for waiver of penalty under Section 78.
3. Shri Rajesh K Agarwal, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. I have carefully considered the submission made by both sides and perused the records. I find that there is no dispute in the fact that the appellant have discharged the service tax under reverse charge mechanism in respect of the services received in the month of June, 2017 and payment of service tax was made in 13.07.2017. The appellant have filed the ST-3 return for the period ending on 30.06.2017 on 10.07.2017. The appellant have reflected the cenvat credit of service tax paid on 13.07.2017 of the said return on 30.06.2017. Since the service tax was paid on 13.07.2017 by no stretch of imagination the same could have been mentioned in the ST- 3 return filed on 10.07.2017. Moreover, even the circular issued in this regard is applicable to only those cases where the service tax was paid by 05th /06th of July , 2017 or at the most the same is paid before filing the return. In case of the service tax payment made after filing the return the assessee was supposed to file a revised return incorporating the cenvat credit paid of service tax on RCM which appellant has failed to do. Therefore, the appellant cannot get the benefit of the Circular dated 28.09.2017. Accordingly, the payment of duty made by utilizing the cenvat credit in the facts of the present case is not legal and correct. The right course of action for the appellant was either to revise the return and show the adjustment or claim the refund of cenvat credit under section 142 (3) of CGST Act, 2017. Therefore the appellant’s availment of cenvat credit of service tax paid on 13.07.2017 and utilization thereof for payment of excise duty for the month of June, 2017 is not correct. Therefore, the demand of cenvat credit is sustained. However, the appellant has liberty to opt for alternate i.e. filing a revised return or claiming refund under Section 142 (3) of CGST Act, 2017 if permissible as per law.
4.1 As regard the penalty, I find that since there is no intention of the appellant to evade any duty as the appellant have discharged the service tax and utilized the same though incorrectly but it was a revenue neutral situation as the appellant is otherwise entitled for the refund of the same amount. Hence, in absence of any mala fide penalty under section 78 is not imposable. Therefore, the penalty imposed under section 78 is set aside.
5. Accordingly, the impugned order is modified to above extent . The appeal is partly allowed in above terms.
(Pronounced in the open court on 16.03.2023)
