2014 (10) TMI 202 - AT - Service Tax

CENVAT Credit - whether the appellant should pay the amount of ₹ 7,78,245/- with interest or should it be sent back for verification - Held that - Assuming that the entire amount is payable, it would show that the appellants have already reversed the entire amount of CENVAT credit in dispute in this case. Only interest would be payable on the insurance service. It was also submitted that the reversal took place within about three years from the date of availment of the credit. Therefore, the interest cannot be more than ₹ 4 lakhs whereas after taking the insurance service amount assuming the whole amount is inadmissible there would be still more than ₹ 12 lakhs available which has already been reversed but admissible. Assessee would like to end the litigation totally and therefore they would not request for recredit of the CENVAT credit taken by them and in view of the fact that interest payable would be substantially less than the amount of credit admissible, the whole issue can be settled by taking a view that the entire demand is not sustainable but no further credit or debit is required to be made by the appellant - appellant would neither be entitled for CENVAT credit nor would be liable to pay any further amount - Decided partly in favour of assessee.

Summary

Issues:
1. Eligibility for CENVAT credit of certain services.
2. Disallowance of CENVAT credit for Insurance service.
3. Voluntary forego of rebate and settlement of the case.

Analysis:
1. The judgment addresses the eligibility of the appellant for CENVAT credit concerning various services such as Chartered Accountant services, Business Auxiliary Services, Event Management Service, Photography service, Installation and Commissioning service, Mandap Keeper service, Insurance service, and Management and Business Consultancy service. The appellant argued that the disallowance of credit was not in accordance with the law, emphasizing that essentiality is not a specified requirement for input services under the law. The appellant supported their case with several legal precedents. The tribunal agreed with the appellant, ruling in their favor and allowing the benefit of service tax credit, except for Insurance service.

2. Regarding the Insurance service, the tribunal found the rejection of the credit valid as the appellant failed to substantiate the actual expenses incurred and not recovered from employees. Typically, the matter would have been remanded at this stage; however, considering the submissions made by the appellant's counsel, the tribunal decided to allow the appeal at this stage instead of remanding the matter. The appellant's decision to voluntarily forego rebate claims related to the disputed amounts further influenced the tribunal's decision-making process.

3. The judgment also delves into the voluntary forego of rebate claims by the appellant, which were part of the amounts in dispute. The appellant had voluntarily reversed the entire amount of CENVAT credit in question and expressed their willingness to end the litigation by not requesting recredit. The appellant proposed settling the matter by agreeing to pay a specific amount with interest, which the tribunal found reasonable. Consequently, the tribunal decided that the appellant would neither be entitled to CENVAT credit nor liable to pay any further amount, thereby settling the case on the terms proposed by the appellant's counsel.