2012 (11) TMI 564 - AT - Central Excise

CENVAT Credit of Service Tax on Outdoor Catering Services - denial - demand of predeposit - Held that - The adjudication order show that the amount of Rs.35,49,150/- has been recovered from the employees with regard to canteen services. It is the contention of the applicant that though the amount has been recovered from the employees, the applicant has paid the entire Service Tax amount and no Service Tax has been recovered from the employees. The figures submitted by the applicant in the written submissions need verification by the adjudicating authority, particularly when the applicant has not produced invoices issued by the service provider. Also the amount recovered from the employees is whether cum tax amount need to be verified - remand the case back to the original authority for de novo adjudication after waiving the pre-deposit.

Summary

Issues:
Denial of Service Tax credit on Canteen/Catering Services.

Analysis:
The applicant sought waiver of pre-deposit and stay of recovery of duty and penalty. The issue revolved around the denial of Service Tax credit on Canteen/Catering Services. The Department alleged that the assessee wrongly availed CENVAT Credit of Service Tax paid on Outdoor Catering Services for the canteen, contravening the provisions. The lower authorities confirmed the show-cause notice. The applicant's representative argued that the credit denial was based on a judgment of the Hon'ble Bombay High Court in a specific case. He contended that the entire Service Tax was borne by the applicant, supported by a certificate from a Chartered Accountant stating no Service Tax was recovered from employees. The Revenue's representative argued that if any amount was recovered from customers/employees, the Service Tax on that amount would not be available for CENVAT Credit. The Tribunal found it a factual issue whether the applicant charged Service Tax on the amount recovered from employees for canteen services. The figures submitted needed verification, especially without produced invoices from the service provider. The Tribunal remanded the case to the original authority for a fresh adjudication to verify the amounts charged from employees in the invoices issued by the service provider, ensuring a reasonable opportunity of hearing for the appellant.

The judgment highlighted the importance of factual verification in determining the eligibility for Service Tax credit on Canteen/Catering Services. The Tribunal emphasized the need for proper documentation and verification of amounts charged from employees to ascertain the applicability of Service Tax credit. The decision to remand the case for de novo adjudication underscored the significance of ensuring a fair and thorough examination of the facts before reaching a final decision. The judgment aimed to uphold the principles of natural justice and procedural fairness by providing the appellant with an opportunity to present their case and have the relevant evidence considered in the adjudication process.

The Tribunal's decision to remand the case back to the original authority for de novo adjudication demonstrated a commitment to ensuring a comprehensive and accurate assessment of the facts. By directing the verification of amounts charged from employees and the production of invoices from the service provider, the Tribunal sought to clarify the disputed issues and reach a well-founded decision based on verified information. The emphasis on providing a reasonable opportunity of hearing to the appellant underscored the importance of procedural fairness and the right to be heard in legal proceedings. Overall, the judgment reflected a meticulous approach to resolving the issues at hand and ensuring a just and informed decision based on verified facts and proper procedural safeguards.