By Puloma Dalal, Jayesh Gogri, Chartered Accountants
fiogf49gjkf0d
CENVAT credit balance can be utilised to pay service tax demand arising out of adjudication order in view of the self assessment system under service tax laws.
Facts:
Short payment of service tax along with interest and penalty was confirmed against the appellants. The appellants did not dispute the short levy, and hence, utilised the CENVAT credit availed in the service tax return to make good the short levy. This was not considered by the department while computing the said short payment to make part payment of the demand under adjudication order. However, the original adjudicating authority rejected the utilisation of CENVAT credit, since there was no evidence of admissibility of CENVAT credit. The Commissioner (Appeals) observed that due to self-assessment system under service tax laws, the role of adjudicating authority is limited to scrutiny and issuing SCNs and hence, there is no question of obtaining any approval for availment and utilisation of CENVAT credit. Further, the admissibility or inadmissibility of the credit cannot be the subject matter of the proceedings.
Held:
Noting the observations made by the Commissioner (Appeals), the issue was decided in favour of the appellants and the reversal of CENVAT credit was taken to mean payment of service tax payable as a consequence of adjudication proceedings.
