2011 (6) TMI 367 - AT - Service Tax

Tax liability - Revenue aggrieved by OIO as the Adjudicating Authority has allowed Cenvat credit without verification of relevant documents & has not confirmed the amounts demanded in the show cause notice - Held that - The demand raised in the show cause notice has to be reconsidered by Commissioner in line of direction given in our Final Order dated 07.10.2010 and arrive at the correct tax liability of the assessee. While arriving at such correct tax liability, the Commissioner is also directed to consider the issue of Cenvat credit availed by the appellant after due verification of the duty paying documents. Adjudicating Authority also should keep in mind that assessee is disputing only the inclusion value of the cost of land to be included in the aggregate value of the services rendered by them and not the amount of Service Tax admitted and paid by them under Health Club and Fitness Services . Adjudicating Authority should consider the imposition of penalties under Sections 76, 77, 78 and interest under Section 75 after arriving at a conclusion as per the direction given above and direction given in our Final Order dated 07.10.2010.

Summary

Issues:
1. Disallowance of Cenvat credit without verification of documents
2. Discrepancy in the amount demanded in show cause notice and confirmed by Adjudicating Authority
3. Imposition of interest and penalties under Sections 75, 76, and 78
4. Remand for reconsideration of tax liability and verification of Cenvat credit documents

Analysis:
The appeal filed by the Revenue challenges Order-in-Original No. 30/2008-ST dated 11.12.2008. The Revenue contends that the Adjudicating Authority allowed Cenvat credit of Rs. 53,53,477/- without verifying relevant documents and did not confirm the full amounts demanded in the show cause notice. The Revenue argues that interest under Section 75 of the Finance Act should be charged on the accepted tax liability, and penalties under Sections 76 & 78 should also apply to the accepted amounts. The Revenue asserts that the matter should be remanded for the Adjudicating Authority to reconsider these issues.

The Respondent, on the other hand, points out that a previous Tribunal order remanded the matter back to the Adjudicating Authority regarding the Service Tax liability on the cost of land received by the assessee. The Respondent agrees to the verification of Cenvat credit documents but requests a clear direction from the bench. After considering both sides' submissions and reviewing the records, the Tribunal notes that the Adjudicating Authority confirmed a demand of approximately Rs. 1.75 crores, whereas the show cause notice had demanded around Rs. 3.62 crores.

The Tribunal decides that the demand raised in the show cause notice needs to be reassessed by the Commissioner in line with the Tribunal's previous order. The Commissioner is directed to determine the correct tax liability of the assessee, considering the Cenvat credit availed after verifying the duty paying documents. It is clarified that the assessee disputes only the inclusion of the cost of land in the aggregate value of services, not the admitted and paid Service Tax under 'Health Club and Fitness Services.' The Adjudicating Authority is instructed to consider imposing penalties under Sections 76, 77, 78, and interest under Section 75 after reaching a conclusion based on the directions provided. The appeal by the Revenue is disposed of accordingly.