2017 (3) TMI 1841 - AT - Service Tax

CENVAT Credit - statutory returns have been filed belatedly - period 01.04.2005 to 31.03.2007 - HELD THAT - Since the appellant had not filed the ST-3 returns for the period after March 2005, the department issued show cause notice for the demand of service tax on the basis of the profit and loss accounts and income tax returns. However, ST-3 returns appeared to have been filed belatedly on 22.11.2007 in which it has been reported that the entire service tax liability has been discharged by making use of the accumulated cenvat credit through input services. Discharging the service tax liability by making use of accumulated cenvat credit is a valid mode of discharging the liability. The appellant had admitted that relevant ST-3 returns were filed belatedly and the department did not consider such ST-3 returns reflecting the payment of services by making use of accumulated cenvat credit. There is also a difference in the liability of service tax projected in the show cause notice as well as claimed by the appellant through ST-3 returns which needs to be looked into and concluded - Since the original authority did not have the benefit of the ST-3 returns filed by the appellant belatedly, it is deemed appropriate to remand the matter to the original adjudicating authority. Matter remanded to the Original Adjudicating Authority for denovo decision after considering the St-3 returns belatedly filed by the appellant - Appeal allowed by way of remand.

Summary

Issues:
1. Appeal against demand of service tax for the period 01.04.2005 to 31.03.2007 due to failure to file ST-3 returns.
2. Discrepancy in service tax calculation between the department and the appellant based on profit and loss accounts.
3. Dispute regarding the utilization of cenvat credit to discharge service tax liability.
4. Allegation of wrongly availed cenvat credit in the name of a different entity.
5. Need for a denovo decision considering belatedly filed ST-3 returns and cenvat credit utilization.

Issue 1:
The appeal was made against the demand of service tax for the period 01.04.2005 to 31.03.2007 due to the appellant's failure to file ST-3 returns. The original authority confirmed the demand, including interest and penalties. The appellant challenged this decision before the Commissioner (A), who upheld the original order, leading to the current appeal.

Issue 2:
A key contention was the discrepancy in the calculation of service tax liability between the department and the appellant, based on profit and loss accounts. The appellant claimed to have discharged the entire service tax liability using cenvat credit accumulated through input services. The department's calculation differed from the appellant's, leading to a need for clarification and reconciliation.

Issue 3:
The dispute centered on the utilization of cenvat credit by the appellant to discharge the service tax liability. The appellant argued that the belatedly filed ST-3 returns clearly indicated the use of cenvat credit, which the department did not consider during the initial assessment. The Tribunal emphasized the validity of discharging the liability through accumulated cenvat credit and directed a reassessment by the original adjudicating authority.

Issue 4:
An allegation was raised regarding the appellant wrongly availing cenvat credit in the name of a different entity, which was not initially part of the show cause notice. The Tribunal highlighted that if such discrepancies existed, separate proceedings should be initiated for recovery, emphasizing procedural fairness and due process.

Issue 5:
The Tribunal set aside the impugned order and remanded the matter to the Original Adjudicating Authority for a fresh decision, considering the belatedly filed ST-3 returns and the utilization of cenvat credit. It stressed the importance of providing the appellant with an effective hearing and the admission of additional evidence if necessary, ensuring a fair and comprehensive review of the case.

This judgment addresses various issues, including the demand for service tax, discrepancies in tax calculations, cenvat credit utilization, and procedural fairness. The Tribunal emphasized the importance of considering belatedly filed returns and cenvat credit utilization in determining the tax liability. It highlighted the need for a thorough reassessment by the original authority, ensuring procedural correctness and fairness in addressing any alleged discrepancies. The decision underscores the significance of due process and fair treatment in tax matters, emphasizing the need for a comprehensive review and effective hearing for all parties involved.