2011 (1) TMI 743 - AT - Service Tax

Waiver of pre-deposit - Short paid of service tax - Payments were made good by assessee by availment of Cenvat Credit on the input services - Eligibility to Cenvat Credit on the service tax paid on the input services is based on the invoices, which were not produced before lower authorities - Since the eligibility to the Cenvat Credit needs to be verified from the factual matrix, we are of the considered view that the Adjudicating Authority should go into the matter and re-consider the issue afresh - Appeal is allowed by way of remand.

Summary

Issues: Stay petition for waiver of pre-deposit of service tax, interest, and penalty under section 78.

Analysis:
The judgment by the Appellate Tribunal CESTAT, BANGALORE, involved a stay petition filed for the waiver of pre-deposit of service tax, interest, and penalty under section 78. The judges, M V Ravindran and P Karthikeyan, heard arguments from both sides and decided that the appeal itself could be disposed of without the need for pre-deposit. The appellant's Chartered Accountant argued that the demand arose due to alleged short payment of service tax, which was rectified by availing Cenvat Credit on input services. It was noted that the lower authorities had not been provided with the invoices to support the eligibility for service tax on input services.

The Judge and the Departmental Representative (DR) acknowledged that eligibility for Cenvat Credit on service tax paid for input services is reliant on the invoices, which were not presented before the lower authorities. Upon reviewing the records, it was determined that the appellant might be entitled to a credit of Rs.1,28,158 for service tax paid on input services, which was rectified by utilizing Cenvat Credit. However, due to the need for verification of eligibility for Cenvat Credit based on the factual circumstances, the Adjudicating Authority was directed to re-examine the issue while ensuring the principles of natural justice are followed. The impugned order was set aside, and the matter was remanded back for fresh consideration. The appeal was allowed by way of remand, and the stay petition was also disposed of.

In conclusion, the judgment addressed the issues raised in the stay petition regarding the waiver of pre-deposit of service tax, interest, and penalty under section 78. The decision highlighted the importance of providing necessary documentation, such as invoices, to support claims for Cenvat Credit and emphasized the need for a thorough reconsideration of the matter by the Adjudicating Authority while upholding principles of natural justice.