2015 (12) TMI 326 - AT - Service Tax

Denial of CENVAT Credit - management, maintenance and repair service - Held that - Services were rendered by the appellant to National Highways Authority of India for the maintenance or repairs of the roads. We find that the issue is no more res integra inasmuch as vide Finance Act of 2012, retrospective exemption was granted under Section 97 and Section 98 - first appellate authority while setting aside such demands has also not given any reasoning which could be appreciated by us. In the absence of any reasoning by the lower authorities, we find that this particular issue of eligibility to avail Cenvat credit on the various services, which are consumed by the appellant for providing taxable output services, needs reconsideration by the adjudicating authority. We, without expressing any opinion on the merits on this point, set aside the impugned order to that extent and remand the matter back to the adjudicating authority to consider this issue afresh. The adjudicating authority, needless to say, will follow the principles of natural justice before coming to any conclusion. - Appeal disposed of.

Summary

Issues: Appeal against Order-in-Appeal, Additional grounds application, Service Tax liability for management, maintenance, and repair service, Cenvat credit eligibility.

Analysis:
1. Additional Grounds Application: The Revenue filed a miscellaneous application for additional grounds, which was allowed, and the main appeal was taken up for disposal. The miscellaneous application was disposed of.

2. Service Tax Liability: The first appellate authority set aside the demand on the appellant for providing 'management, maintenance, and repair service' to the National Highways Authority of India. The Finance Act of 2012 provided a retrospective exemption for such services from June 16, 2005, to July 26, 2009. As the relevant period in this case was from November 16, 2005, to March 31, 2008, the retrospective amendment exempted the tax liability imposed on the appellant. The appeal filed by the Revenue on this point was rejected.

3. Cenvat Credit Issue: The adjudicating authority denied Cenvat credit to the appellant, stating that the services were not exclusively used for business purposes. The first appellate authority did not provide reasoning for setting aside the demands. The issue of eligibility to avail Cenvat credit on services consumed by the appellant for providing taxable output services needed reconsideration. The matter was remanded back to the adjudicating authority for fresh consideration, emphasizing the application of principles of natural justice.

4. Conclusion: The appeal filed by the Revenue was disposed of, with the demand set aside due to the retrospective exemption for the service tax liability. The issue of Cenvat credit eligibility was remanded back to the adjudicating authority for reconsideration. The principles of natural justice were to be followed in reaching a conclusion on this matter.