2025-VIL-775-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cenvat credit, Cross-objections, Limitation, Penalty - Demand the Service Tax on ineligible Cenvat credit taken along with applicable interest and penalty under Section 78 of the Act. The adjudicating authority confined the Cenvat credit demand to Rs.72,150/- and refrained from imposing penalty – in Department appeal the Commissioner (Appeals) allowed the Revenue's appeal and imposed a penalty on the appellant. However, the Appellate Authority rejected the appellant's cross-objections on the ground that neither Section 84 nor Section 85 of the Act empowered the filing of such cross-objections - Whether the cross-objections filed by the appellant are maintainable – HELD - The cross-objections filed by the appellant are maintainable - Further, the Appellate Authority, having invited the appellant to file cross-objection, then could not have decided the matter without looking into the cross objections so filed upon its invitation. The Appellate Authority committed an egregious error in not looking into the merits of the cross-objections and instead dismissing them without consideration, especially when the Appellate Authority had invited the appellant to file the cross-objections - the impugned Order-in-Appeal is untenable and set aside the same. The appellant succeeds on merits as well as on limitation – The appeal is allowed - Whether the show cause notice was barred by limitation – HELD - Apart from merely stating that the appellant had suppressed facts with intention to evade payment of duty, no evidence of wilful misstatement or suppression with intent to evade payment of duty was provided in the show cause notice. The invoking of the extended period was, therefore, untenable. The Tribunal also observed that the services on which the appellant had availed Cenvat credit have been held to be input services on which an assessee can avail Cenvat credit, being activities relating to business - Whether the imposition of penalty was sustainable – HELD - The Tribunal held that the imposition of penalty in the impugned order-in-appeal is unsustainable. The Hon'ble High Court of Karnataka has held that when the assessing authority, in its discretion, has held that no penalty is leviable, the revisional authority cannot invoke its jurisdiction and impose penalty for the first time.
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