2010 (6) TMI 346 - AT - Service Tax

Admissibility of credit of service tax - service tax paid on GTA services - Larger Bench, In the case of ABB limited v. CCE, decided that credit would be admissible - Bombay High Court, in the case of Coca-Cola Limited, also allowed the credit - Revenue has filed appeal before Hon ble High Court of Karnataka which is yet to be decided Held that - matter remanded to Original Adjudicating Authority, who would take up the issue for decision after the matter is decided by the Hon ble Karnataka High Court appeal disposed of accordingly

Summary

Issues:
Admissibility of credit of service tax on sales promotion, penalty imposition, contradictory decisions on admissibility of credit, enhancement of penalty by the Commissioner.

Analysis:
The case involves the admissibility of credit of service tax on sales promotion, where the department appealed against the reduction of penalty by the Commissioner and sought enhancement of penalty equal to duty. The assessee did not file an appeal initially but submitted cross-objections after the Revenue's appeal, claiming admissibility of service tax credit. The issue of admissibility of credit was referred to the Larger Bench due to contradictory decisions. The Tribunal's decision in ABB Limited v. CCE allowed credit for service tax on GTA services regardless of the place of removal. Conversely, the Bombay High Court in Coca-Cola Limited held that service tax on sales promotion is also eligible for credit. The Revenue appealed the ABB Limited decision to the High Court of Karnataka, which is pending. Given the conflicting decisions and pending appeal, the Tribunal decided to set aside the impugned orders and remand the case to the Original Adjudicating Authority for a fresh decision after the Karnataka High Court's ruling. All issues are kept open for reconsideration.

The Tribunal noted that since two conflicting views exist on the admissibility of credit for service tax on sales promotion and GTA services, the department's appeal for penalty enhancement cannot be sustained. The fact that the matter was referred to the Larger Bench and the pending decision by the High Court of Karnataka on the ABB Limited case indicate the possibility of different interpretations. Therefore, it was deemed appropriate to allow the Original Adjudicating Authority to reexamine the issue once the High Court's decision is finalized. The Tribunal emphasized that all aspects of the case remain open for further consideration, and the cross objections raised by the assessee were also disposed of in the same order.

In conclusion, the Tribunal set aside the impugned orders, remanded the appeals to the Original Adjudicating Authority for fresh consideration, and maintained that all issues are subject to review. The conflicting decisions on the admissibility of credit for service tax on sales promotion and GTA services necessitated a reevaluation of the case after the pending appeal is resolved. The Tribunal's decision aimed to ensure a fair and comprehensive assessment of the matter in light of the evolving legal interpretations and pending judicial determinations.