Wrong availment of CENVAT Credit – Assessee not paid tax on roaming charges received from other operators but availing CENVAT Credit on output services in excess of prescribed limit of 35% – Availment of CENVAT Credit on exempted services not disclosed – Deliberate suppression and not mere omission – Held – Extended period applicable – Penalty levied u/s. 76 and 78 held valid.

Wrong availment of CENVAT Credit – Assessee not paid tax on roaming charges received from other operators but availing CENVAT Credit on output services in excess of prescribed limit of 35% – Availment of CENVAT Credit on exempted services not disclosed – Deliberate suppression and not mere omission – Held – Extended period applicable – Penalty levied u/s. 76 and 78 held valid.

The appellant was engaged in the business of providing cellular telephone service. Apart from charges received from its own subscribers, it also received roaming charges from other operators towards roaming facility provided by the appellant to the subscribers of the latter. The appellant did not pay any tax on the amount so received towards roaming charges and utilised the entire service tax credit availed of on various input services for payment of service tax without any restriction of 35% as required under Rule 3(5) of the Service Tax Credit Rules, 2002 and nowhere disclosed the said excess amount so utilised.

Held:

The appellant wilfully suppressed the facts of availment of input credit in respect of exempted services in excess of the prescribed limit of 35%. When the limit is prescribed, facts ought to have been mentioned clearly. When exempted service was availed of in excess of the prescribed limit, it was incumbent upon the appellant to disclose it. Thus, the case being covered under the proviso to s/s (1) of section 73 of the Act, the case is not one of mere omission to give correct information but was devised deliberately to evade tax liability. Not finding any involvement of substantial question of law, the Court dismissed the appeal.