2010 (11) TMI 733 - AT - Service Tax

Demand for service tax - appellant failed to register themselves as a provider of erection, commissioning and installation service - Commissioner has simply stated that the claim is far from truth because it was alleged in the show-cause notice that input cenvat credit has been used Held that - once an allegation is made in the show-cause notice, there is no need to verify the records. In view of the contradictory claims as regards registration and also views taken by the lower authorities which seem to be contradictory to documentary evidence available, the matter is required to be reconsidered by the original adjudicating authority, stay petition is allowed, impugned order is set aside and the matter remanded to the original adjudicating authority who shall consider the matter afresh after giving a reasonable opportunity to the appellants

Summary

Issues:
Demand for service tax with interest confirmed, penalty imposed under sections 76 and 77 of Finance Act, 1994 for utilizing input cenvat credit for payment of service tax on erection, installation, and commissioning service.

Analysis:
The appellant, a manufacturer and service provider, faced a demand for service tax, interest, and penalties for allegedly utilizing input cenvat credit for paying service tax on specific services. The original adjudicating authority found discrepancies in the appellant's registration status and tax payment methods. The appellant claimed to be registered for providing the services and using input service tax credit instead of input cenvat credit for tax payments. However, the Commissioner (Appeals) noted the discrepancy between the appellant's claims and the show-cause notice's allegations. The Commissioner's failure to verify the records and reliance solely on the notice raised concerns about due diligence. Given the contradictory claims and observations by lower authorities, a remand was deemed necessary for a fresh consideration by the original adjudicating authority. Both parties agreed to the remand, leading to the stay petition's approval, setting aside the impugned order, and remanding the matter for reevaluation with a reasonable opportunity for the appellants to present their case.

This judgment highlights the importance of accurate registration, proper tax payment methods, and the need for authorities to verify claims thoroughly. The discrepancy between input service tax credit and input cenvat credit usage, along with the failure to validate records, led to the decision for a remand. The appellate tribunal emphasized the requirement for a fair reconsideration by the original adjudicating authority, ensuring compliance with legal procedures and granting the appellants a reasonable opportunity to present their case. The decision underscores the significance of documentary evidence, consistency in claims, and the duty of authorities to conduct a comprehensive review before reaching conclusions in tax-related matters.