2017 (10) TMI 852 - HC - Service Tax

Whether the Tribunal, under the facts and circumstances, was justified in holding that Notification No. 01/2006 ST is in confrontation with the charging section, Section 66 of the Finance Act, 1994? - Held that - On plain reading of paragraphs 5 and 5.1, we find that there is no consideration of the detailed submissions made by the Appellate Revenue before CESTAT. In paragraphs 5 and 5.1, only the conclusions have been recorded without recording any reasons. We are constrained to hold that the impugned judgment and order is perverse and hence, the same deserves to be set aside - appeal is restored to the file of CESTAT, West Zonal Bench at Mumbai

Summary

Issues:
1. Interpretation of Notification No. 01/2006ST in relation to Section 66 of the Finance Act, 1994.
2. Entitlement to refund of service tax paid by subcontractor based on CENVAT credit condition.

Analysis:
1. The appeal challenged a judgment by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding a refund claim of service tax. The Deputy Commissioner initially rejected the claim, but the Commissioner (Appeals) later allowed it, stating that the tax liability was correctly discharged by the main contractor, making the subcontractor eligible for a refund. The CESTAT, in its judgment, found that Notification No. 01/2006ST was not applicable concerning the condition of not taking CENVAT credit on the service tax paid by the subcontractor. The Tribunal also noted that the factual findings were not challenged and upheld the respondent's entitlement to a refund, dismissing the appeal by the Revenue.

2. The Tribunal's decision was based on a comparison with a previous case and did not provide detailed reasoning for its conclusions. The appellate court found the judgment to be lacking in reasons and considered it perverse. Consequently, the court set aside the CESTAT's order, quashing the judgment dated August 12, 2014, and restoring the appeal to the CESTAT for further proceedings. The court emphasized that its decision did not involve an adjudication on the merits of the underlying controversy, directing the parties to appear before the CESTAT for scheduling a new hearing date in September 2017 and urging the tribunal to prioritize the disposal of the long-pending appeal.