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August 2016

2016(41) STR 236(Tri.-Del) Travel Inn India Pvt. Ltd. vs. Commissioner of Service Tax, Delhi

By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
Reading Time 1 mins
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Payment of CENVAT credit availed along with interest at a later stage shall be considered as non-availment of CENVAT credit.

Facts
The Appellants are providing Tour Operator Service and were availing CENVAT credit on input services for providing output services. Notification No. 01/2006-ST had been issued granting exemption to the above services stating that exemption will not apply if CENVAT credit has been taken. On realizing the exemption and its condition, the credit taken was immediately paid along with applicable interest. However, department disallowed the exemption since they had not only availed the credit but had also utilized it for payment of service tax and therefore the conditions of the exemption were not satisfied.

Held
The Tribunal relied upon the decision of Khyati Tours and Travels [2011 (24) STR 456 (Tri.-Ahmd)] wherein it was held that reversing CENVAT credit with interest shall amount to non-availment of CENVAT credit. Paying the CENVAT amount along with interest amounts to non-availment of CENVAT credit and therefore exemption is available.

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