2011 (6) TMI 91 - AT - Service Tax

Waiver of pre-deposit - Denying abatement in terms of notification No. 9/2004-ST dated 09.7.2004 - Abatement in terms of the said notification is available subject to the condition that no modvat credit stands availed by the assessee - Assessee submits that the entire credit of Rs. 8,252/- stands reversed by them along with interest of Rs. 4,291/- As such, by reversing the credit availed on the input services, the same would amount as if no credit was ever taken - As such,dispense with the condition of pre-deposit of service tax - As the Commissioner (Appeals) has not decided the appeal on merits, set-aside the impugned order and remand the matter to Commissioner (Appeals) for decision on merits without insisting on any pre-deposit - Stay petition as also appeal get disposed off in above terms.

Issues:
1. Dismissal of appeal for non-compliance with stay order requiring deposit of service tax.
2. Denial of abatement in service tax due to availing modvat credit.
3. Reversal of credit availed on input services.
4. Appeal decision based on merits.
5. Remand of the matter to Commissioner for decision without pre-deposit.

Issue 1: Dismissal of appeal for non-compliance with stay order
The Commissioner (Appeals) dismissed the appeal as the appellant failed to comply with the stay order directing the deposit of the confirmed service tax amount of Rs. 3,40,031. The Tribunal observed this non-compliance and considered the subsequent arguments regarding the availed credit reversal.

Issue 2: Denial of abatement due to availing modvat credit
The appellants were denied abatement in service tax under notification No. 9/2004-ST as it required no modvat credit availed by the assessee. The advocate contended that during the relevant period, except for March 2006, there was no such condition in the notification. The reversal of the credit along with interest was highlighted to support the claim for abatement.

Issue 3: Reversal of credit availed on input services
The Tribunal noted that the reversal of credit by the appellants on input services would equate to not availing any credit, as per established legal precedents. This action was considered as meeting the conditions for abatement under the notification, despite not being emphasized before the Commissioner (Appeals).

Issue 4: Appeal decision based on merits
As the Commissioner (Appeals) did not decide the appeal on its merits, the Tribunal set aside the order and remanded the matter for a decision on merits without requiring any pre-deposit of service tax. The Tribunal dispensed with the pre-deposit condition due to the reversal of credit by the appellants.

Issue 5: Remand of the matter to Commissioner for decision without pre-deposit
The Tribunal concluded by remanding the matter to the Commissioner (Appeals) for a decision on merits without insisting on any pre-deposit of service tax. The stay petition and appeal were disposed of under these terms, ensuring a review of the case based on its substantive merits.

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