COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-LTU Vs. CANARA BANK EXECUTOR, TRUSTEE & TAXATION

JUDGEMENT

(1.) This appeal is filed by the revenue challenging the order passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zone, Bangalore in ST/3565/2001 -DB dated 27.05.2014.

(2.) The facts in brief are that the respondent is a banking company providing banking and other financial services under Sec. 65(12) of the Finance Act, 1994. The respondent is providing both taxable and exempted services. During the course of verification of input tax credit availed by respondent, it was observed by the authorities that the respondent had shown certain services namely, house keeping services, man power, recruitment services, credit card services, ATM services under the category of management, maintenance or repair service and technical and analysis service etc. which are one of the services specified in Rule 6(5) of the CENVAT Credit Rules (the 'Rules' for short). The respondent department noticed that the respondent had wrongly utilized credits of service tax paid on these services to the extent of 100% of the amount of service tax payable on taxable output services for the period up to 31.3.2008 and for the period from 1.4.2008, they had not proportionately reversed the credit attributable to the exempted services. The respondent had utilized the service tax credit in excess of 20% of the service tax payable on taxable output services permissible under erstwhile Rule 6(3)(c) of the Rules during the period up to 31.3.2008 and failed to pay the amounts towards the credit taken on the services attributable to exempted services during the years 2008 -09 and 2009 -10 respectively in terms of Rule 6(3A) of the Rules. The Commissioner of Central Excise and Service Tax issued show cause notice proposing to demand Rs. 2,15,14,945/ - towards service tax credit taken on certain services wrongly classifying by the assessee under the category of management maintenance and repair service and technical testing and analysis service etc. specified in Rule 6(5) of the Rules along with interest and further demanded amount towards service tax credits taken during the years 2008 -09 and 2009 -10 on the services attributable to exempted services payable under the provision of Rule 6(3)(II) read with Rule 6(3A) of the Rules along with the interest and penalty on the said amount. The order in original came to be passed after hearing the respondent, reducing the amount originally proposed/demanded in the show cause notice to Rs. 81,23,732/ - from Rs. 2,15,14,945/ - and the demand in respect of wrong classification of services under Rule 6(5) of the Rules to Rs. 20,62,224/ - from Rs. 56,68,210/ -. Interest and penalty were demanded on this amount in terms of the Rules read with Sec. 78 of the Finance Act, 1974.

(3.) Aggrieved by this order, the respondent preferred an appeal before the CESTAT in ST/35/665/2012. The CESTAT rejected the appeal as regards the normal period, in respect of wrong classification of services and directed the assessee to make the payment of Rs. 3,71,501/ - and interest of Rs. 4025/ -. Thus, the appeal was partly allowed by the Tribunal.