2012 (5) TMI 509 - AT - Service Tax

Availability of CENVAT Credit of Service Tax paid in respect of services relatable to the Effluent Treatment Plant - CENVAT Credit denied on procedural aspect that various items on which the same can be availed was not having registration number of the service provider Held that - it is not clear from the impugned order of the Commissioner (Appeals) that as to whether the same is denied on the ground of procedural lapses or on the ground that the duty does not stand deposited by the service provider with the department, issue of non-payment of Service Tax by service provider was raised in the Audit. Whether this was the audit of present appellant or of the service provider is not clear, matter is remanded to Commissioner (Appeals), for fresh consideration, appeal is disposed off

Summary

Issues:
1. Availability of CENVAT Credit for Service Tax paid for services related to the Effluent Treatment Plant.
2. Denial of CENVAT Credit due to procedural lapses and non-payment of Service Tax by the service provider.

Issue 1: Availability of CENVAT Credit for Service Tax paid for services related to the Effluent Treatment Plant:
The dispute in this appeal concerns the availability of CENVAT Credit for Service Tax paid for services related to the Effluent Treatment Plant. The appellant argued that the Effluent Treatment Plant is mandatory for their business operations as per the standards set by the Gujarat Pollution Control Board. They contended that services required for maintaining the plant fall under the definition of input services, as established by various legal precedents such as Indian Farmers Fertilisers Co-op. Ltd. v. CCE, Ahmedabad and other cases. The appellant emphasized that the services used in activities related to business, including the maintenance of the Effluent Treatment Plant, should be eligible for CENVAT Credit. The Tribunal agreed with the appellant's arguments, citing previous judgments that supported the broad definition of input services and the nexus between services and the manufactured goods.

Issue 2: Denial of CENVAT Credit due to procedural lapses and non-payment of Service Tax by the service provider:
Regarding the denial of CENVAT Credit amounting to Rs. 3,50,286 and Rs. 56,374, the Tribunal found ambiguity in the Commissioner (Appeals)'s order. It was unclear whether the denial was based on procedural lapses or the non-payment of Service Tax by the service provider. The Tribunal directed the Commissioner (Appeals) to re-examine these issues, considering the appellant's arguments and the relevant Tribunal decisions presented. The Tribunal set aside the demand of Rs. 1,01,797, along with associated interest and penalties, while remanding the other issues back to the Commissioner (Appeals) for fresh consideration.

In conclusion, the Tribunal ruled in favor of the appellant regarding the availability of CENVAT Credit for services related to the Effluent Treatment Plant. However, the Tribunal found discrepancies in the denial of CENVAT Credit based on procedural lapses and non-payment of Service Tax, prompting a reevaluation by the Commissioner (Appeals). The appeal was disposed of accordingly, with specific directions for further review and consideration on certain issues.