2011 (10) TMI 52 - AT - Central Excise

Cenvat credit of service tax - service tax on rent - appellant by mistake represented that service tax was paid along with rent for the residence of Managing Director, whereas in reality the building was taken on rent for Corporate Office only - appellant has made a mistake in representing the facts correctly - Learned Counsel fairly agrees to deposit 50% of the service tax demanded - matter is remanded to the original adjudicating authority

Summary

Issues: Cenvat credit denial on service tax paid on rent for corporate office.

Analysis:
The judgment deals with the denial of Cenvat credit on service tax paid on rent for a corporate office. The appellants were issued a show cause notice stating that the credit on service tax paid on rent for the corporate office was not admissible as Cenvat credit since it was not considered an input service. However, it was revealed that a mistake had been made in representing the facts before the original adjudicating authority and Commissioner (Appeals). The appellant mistakenly stated that the service tax was paid along with rent for the Managing Director's residence, whereas it was actually paid for the Corporate Office rent. Due to this incorrect representation, the orders passed by the lower authorities were based on wrong facts and contrary to the show cause notice.

The judge acknowledged the mistake in representation made by the appellant and decided that the issue needed to be remanded. The judge waived the requirement of pre-deposit and proceeded to make a final decision on the appeal. It was emphasized that the crux of the issue was whether the Cenvat credit of service tax paid on rent for the Corporate Office was admissible. The judge found that this was not adequately appreciated in the orders of the lower authorities. As the appellant agreed to deposit 50% of the service tax demanded, the judge accepted this offer and remanded the matter to the original adjudicating authority. The authority was directed to ensure compliance with the deposit requirement within four weeks and then proceed to adjudicate the issue after providing a reasonable opportunity to the appellant.

In conclusion, the judgment highlighted the importance of accurate representation of facts in legal proceedings and the need for proper consideration of the admissibility of Cenvat credit on service tax paid for specific purposes. The decision to remand the matter for further adjudication after the deposit was made reflects the judicial approach to ensuring fairness and compliance with legal requirements in tax matters.