SACHDEVA ROADLINES Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THE facts leading to filing of this appeal are, in brief, as under: -

(2.) SHRI A.K. Batra, Chartered Accountant, ld. Counsel for the appellant pleaded that the appellant, a Goods Transport Agency, during the period of dispute, were availing the exemption under notification No. 1/06 -ST (Sl. No. 6) and accordingly, were paying service tax after availing 75% abatement i.e. on 25% of the gross amount charged, that during the period prior to 1.3.2006, the same exemption was available under notification No. 32/04 -ST, which was being availed during that period, that the only conditions for availing exemption notification No. 32/04 -ST were that no credit of central excise duty paid on inputs or capital goods used in or in relation to providing output service has been availed by the assessee or the assessee has not availed the exemption under notification No. 12/03 -ST dated 20.06.2003, that w.e.f. 1.3.2006 notification No. 32/04 -ST was replaced by notification No. 1/06 -ST, the Sl. No. 6 of the Table annexed to which provided the same exemption, that however, in the new exemption notification effective from 1.3.2006, an additional condition of non -availment of cenvat credit in respect of input services were also imposed, that the appellant not being aware of the additional condition having been imposed for availment of this exemption continued to avail cenvat credit in respect of the input services, that as soon as the departmental officers brought this discrepancy to their notice, they immediately reversed the credit of Rs. 1,09,975/ - along with interest, that just because during the period of dispute the appellant due to bona fide mistake availed of the cenvat credit amounting to Rs. 1,09,975/ - in respect of the input services, the benefit of exemption cannot be denied when they immediately reversed this credit along with interest, as soon as this was pointed out to them, that reversal of cenvat credit would amount to non -availment of cenvat credit and hence, the condition of exemption notification stands satisfied, that in this regard, he relies upon the judgment of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE : 1996 (81) ELT 3 (SC), wherein it was held that when exemption under a particular notification was available subject to non -availment of cenvat credit and when cenvat credit initially taken was subsequently reversed prior to clearance of the exempted goods, it would amount to not availing of the cenvat credit and the condition of exemption notification regarding non -availment of cenvat credit stands satisfied, that the Tribunal in the case of Khyati Tours & Travels v. CCE, FO No. A/1059/2011 -WZB/AHD, dated 13 -6 -2011 has held that when exemption under notification No. 1/06 -ST was available subject to non -availment of cenvat credit and cenvat credit initially taken had been subsequently reversed, the reversal of wrongly availed cenvat credit with interest would have the effect as if no credit has been availed and accordingly, the benefit under the notification would not be deniable, that the same view has been taken by the Hon'ble Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India : 2004 (174) ELT 422 (All.), wherein the Hon'ble High Court with regard to extending the benefit of exemption notification No. 15/94 -CE, which was available subject to non -availment of input cenvat credit, held that subsequent reversal of cenvat credit which had earlier been taken, would amount to not taking the credit on the inputs and the benefit of exemption has to be granted, that the same view has been taken by this Tribunal in the case of Sri Lakshmi Saraswathi Textiles (ARNI) Ltd. v. CCE : 2008 taxmann.com 13 (Chennai -CESTAT), that in view of the above judgments of the Tribunal and the High Court the order of the Commissioner denying the benefit of exemption under notification No. 1/06 -ST and confirming the duty demand on this basis is totally incorrect, that the fact that availment of cenvat credit amounting to Rs. 1,09,975/ - in respect of input services during the period of dispute was due to bona fide mistake and ignorance of the appellant is clear from the fact that no sensible assessee would forgo duty exemption of more than rupees one crore just to avail cenvat credit of Rs. 1,09,975/ -, that, in any case, in these circumstances of the case, penalty of equal amount under Section 78 of the Finance Act, 1994 was not justified as there was neither any wilful mis -statement nor suppression of facts or any deliberate defiance of law or dishonest conduct on the part of the appellant and that in view of the above, the impugned order passed by the Commissioner is not correct.

(3.) WE have considered the submissions from both the sides and perused the records.