2019 (9) TMI 75 - AT - Service Tax

Scope of SCN - case of appellant is that Commissioner has traversed beyond the scope of Show Cause Notice by not appropriating the amount of Service Tax paid by them through Cenvat Credit while he has appropriated the amount paid by cash - denial of cum-duty benefit. HELD THAT - Revenue claims that only when the appellants have submitted that a part of the demand has been paid through Cenvat Credit, Ld. Commissioner had to go into the issue to find that Ld. Commissioner held that the condition for allowance of Cenvat Credit in respect of input service is as per Rule 4 (7) of the Cenvat Credit Rules, 2004. He holds that for availing of Cenvat Credit, the noticee must pay the value of input service check with the documents submitted by the appellants as to the correctness of their claim - We find that for this issue, it is required to go through the claim of the appellants about the arithmetical correctness of the duty paid by them through Cenvat Credit, verification needs to be undertaken by the Adjudicating Authority - matter remanded back for reconsideration. Benefit of Cum Duty value while computing the duty liability - HELD THAT - The appellants are a Public Sector Undertaking and as such, as held by the Tribunal as well as various Courts Mens- aria cannot be assumed in respect of PSUs - It was consistently held that no particular person or officer could be benefited by such suppression/mis-declaration by the Organization. Therefore, the appellants are entitled to the benefit of Cum Duty price. The amounts received by them by the appellants from their Customers should be treated to be inclusive of Service Tax and accordingly, the liability of Service Tax re-calculated - For this purpose, also the impugned order needs to go back to the Adjudicating Authority. Appeal allowed by way of remand.

Summary

Issues:
1. Commissioner's authority beyond the Show Cause Notice scope.
2. Denial of Cum Duty benefit by the Commissioner.

Analysis:

Issue 1:
The appellant challenged the Commissioner's authority beyond the Show Cause Notice scope, arguing that the Commissioner had exceeded the issues outlined in the notice. The appellant cited various case laws to support their contention, emphasizing that the adjudicating authority cannot go beyond the scope of the Show Cause Notice. The appellant also highlighted the provision of Section 67(2) of the Finance Act, 1994, claiming eligibility for Cum Duty benefit. The appellant contended that the Commissioner's findings on Cenvat Credit were unwarranted as the Show Cause Notice primarily focused on duty demand. However, the Department's representative argued that the appellant had introduced the issue of Cenvat Credit themselves during the proceedings, allowing the Commissioner to address it. The Department cited legal precedents to support their stance, asserting that the Commissioner was justified in discussing the issue. Ultimately, the Tribunal found merit in the appellant's argument, directing the issue back to the Adjudicating Authority for further examination.

Issue 2:
Regarding the denial of Cum Duty benefit by the Commissioner, the Department contended that suppression of facts by the appellant justified the denial of such benefit. However, the Tribunal noted that as a Public Sector Undertaking (PSU), the appellant should not be penalized for individual actions within the organization. The Tribunal ruled in favor of the appellant, stating that they were entitled to the Cum Duty benefit. The Tribunal instructed the Adjudicating Authority to recalculate the Service Tax liability based on the Cum Duty price received by the appellant from customers. The Tribunal also deemed the penalty imposed as unsustainable, while affirming the liability for interest payment. The Tribunal emphasized that the appellant should have an opportunity to present their case during further proceedings. Consequently, the appeal was allowed, remanding the case to the Adjudicating Authority for reconsideration.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT KOLKATA showcases the legal arguments, citations, and conclusions reached on the issues raised by the parties involved in the case.