2013 (12) TMI 437 - AT - Service Tax

Availment of CENVAT Credit - Less service tax paid - Held that - adjudicating authority has taken a view that sister concern M/s. Sos Finance Ahmedabad has not reversed the excess cenvat credit taken and accordingly he cannot accept the value given in the ST-3 returns for the purpose of discharging service tax liability. The finding given by the first appellate authority does not seem to be in accordance with the law because under the prevailing provision of Sec. 68 of the Finance Act, 1994 service tax was required to be paid by the appellant only on the amount received from the service recipient. It some more credit has been taken by the service recipient then such service recipient should have been issued show-cause-notice for reversal of excess cenvat credit taken - Principle of natural justice should be observed by the adjudicating authority while deciding the issue in denova proceeding - Decided in favour of assessee.

Issues:
1. Discrepancy in service tax payment between M/s. Sos Finance Ahmedabad and M/s. Sos Enterprise, Rajkot.
2. Applicability of section 68 of the Finance Act, 1994.
3. Correct consideration received by the service provider.
4. Benefit of cum duty tax.
5. Imposition of penalties.

Analysis:

Issue 1: Discrepancy in service tax payment
The appeal was filed by M/s. Sos Enterprise, Rajkot against the order upholding the discrepancy in service tax payment between M/s. Sos Finance Ahmedabad and themselves. The appellant argued that they paid service tax on the amount received from M/s. Sos Finance Ahmedabad and should not be held responsible for the excess service tax credit taken by the latter.

Issue 2: Applicability of section 68 of the Finance Act, 1994
The appellant's representative argued that section 68 of the Finance Act, 1994 applied at the relevant time, requiring service tax to be paid only on the amount received from the service recipient. It was contended that if the service recipient took more credit, the appellant should not be liable as they had already paid tax on the received amount.

Issue 3: Correct consideration received by the service provider
The adjudicating authority found that M/s. Sos Finance Ahmedabad had not reversed the excess cenvat credit taken, affecting the correct consideration received by the service provider. The first appellate authority's decision was deemed incorrect as it did not align with the law, which mandated service tax payment based on the actual amount received from the service recipient.

Issue 4: Benefit of cum duty tax
The benefit of cum duty tax was not extended to the appellant, which was argued by the appellant's representative. The need to verify the correct consideration received and extend the cum duty tax benefit to the appellant was highlighted for proper adjudication.

Issue 5: Imposition of penalties
The issue of imposing penalties was kept open for the first adjudicating authority to decide in denova proceeding. The case was remanded back to the original adjudicating authority to consider the observations and ensure the application of natural justice principles.

In conclusion, the appellate tribunal allowed the appeal by way of remand, emphasizing the necessity to determine the correct consideration received by the service provider, extend the cum duty tax benefit, and ensure the imposition of penalties in accordance with the law and principles of natural justice.

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