2012 (8) TMI 344 - AT - Service Tax

Denial of benefit of Notification No. 01/2006-ST as amended, for the reason that the appellant has availed the cenvat credit while providing the Commercial or Industrial Construction services - plea for waiver of pre-deposit - assessee contended reversal of cenvat credit taken on input services - Held that - If an amount taken as cenvat credit on the input services is reversed, various judicial pronouncements holds that such an amount is to be treated as credit not availed. Since this plea was not taken before the lower authorities, it is better left to the lower authorities to consider this plea in the factual matrix and come to a conclusion. Matter remitted back.

Summary

Issues:
1. Waiver of pre-deposit of service tax and penalty under Finance Act, 1994.
2. Eligibility to avail the benefit of Notification No. 01/2006-ST in the context of cenvat credit for Commercial or Industrial Construction services.

Analysis:
Issue 1: The appellant filed a stay petition seeking the waiver of pre-deposit of service tax and penalty under various sections of the Finance Act, 1994. The amounts in question were confirmed by the adjudicating authority and upheld by the first appellate authority. The primary contention was that the appellant was deemed ineligible to benefit from Notification No. 01/2006-ST due to availing cenvat credit while providing Commercial or Industrial Construction services. The tribunal noted that the appeal could be disposed of promptly, considering the narrow scope of the issue. After allowing the application for pre-deposit, the tribunal proceeded to address the appeal itself for final adjudication.

Issue 2: The appellant's counsel highlighted that the entire cenvat credit taken on input services had been reversed by the appellant on a specific date. This reversal was supported by documentary evidence, including an audit objection compliance record. The counsel argued that since the cenvat credit had been reversed, the denial of benefits under Notification No. 01/2006-ST was unjustified. Notably, this argument was not raised before the lower authorities during the initial proceedings. The tribunal, after considering the submissions and perusing the records, acknowledged the significance of the cenvat credit reversal. However, as this aspect was not previously addressed by the lower authorities, the tribunal decided to remit the matter back to the adjudicating authority for a fresh consideration. The tribunal emphasized the importance of following the principles of natural justice in reconsidering the issue, without expressing any opinion on the merits of the case. Consequently, the impugned order was set aside, and the appeal was disposed of, leaving all issues open for further examination.

In conclusion, the tribunal's judgment focused on the eligibility of the appellant to avail the benefit of Notification No. 01/2006-ST concerning cenvat credit for specific services. The decision to remit the matter back to the adjudicating authority for a fresh review underscored the importance of procedural fairness and thorough consideration of all relevant aspects in tax disputes.