2023 (8) TMI 1238 - AT - Service Tax

Exempt service or not - repatriation of export proceeds - Revenue appears to have assumed that the assessee did not receive the full amount in convertible foreign exchange with a period of six months from the date of provision of service or within such extended time as approved by the RBI - Rule 6(8) of the CENVAT Credit Rules, 2004 - HELD THAT - The Ld. Commissioner, having afforded an opportunity to the appellant for production of documents in support, has however observed that the certificate of the chartered accountant furnished by the appellant was dated 16.09.2020, from where he has entertained a doubt that whether it was possible to conduct a thorough verification of all the invoices, ledger, etc., pertaining to three financial years in a matter of few hours. When there is a doubt, then it is always open for the authority to seek clarification / explanation from the appellant in order to arrive at a proper finding instead of suspecting such document. It is not as though there was a serious error for which reason the certificate of the chartered accountant was not considered. Coming to a conclusion based on assumptions and presumptions is not proper. It will be in the interests of justice that the matter be restored to the file of the original authority for de novo adjudication. The authority shall therefore follow the principles of natural justice by affording reasonable opportunities to the appellant to produce necessary documents and evidence in support of their stand and the appellant shall also co- operate with the adjudicating authority without seeking unnecessary adjournments. Appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in the legal judgment are related to the provision of erection, commissioning, and installation services to clients outside India, non-repatriation of export proceeds, invocation of Rule 6(8) of the CENVAT Credit Rules, 2004, failure to maintain separate accounts for input services, demand of Service Tax under proviso to section 73(1) of the Finance Act, 1994, and the rejection of claims by the original authority.

Erection, Commissioning, and Installation Services:
The appellant, engaged in rendering various services including erection, commissioning, and installation services to clients outside India, faced allegations from the Revenue regarding non-repatriation of export proceeds. The Revenue invoked Rule 6(8) of the CENVAT Credit Rules, 2004, stating that failure to receive full convertible foreign exchange within the stipulated time could lead to the service being treated as exempted. Additionally, the Revenue observed that the appellant did not maintain separate accounts for input services used in providing exempted services, as required by Rule 6(3) of the CENVAT Credit Rules.

Demand of Service Tax:
Following a Show Cause Notice issued by the Revenue, the original authority confirmed the proposals, leading to a demand for Service Tax under the proviso to section 73(1) of the Finance Act, 1994, read with Rule 14(1)(ii) of the CENVAT Credit Rules, 2004. The appellant contested these demands, citing various grounds including the non-utilization of inputs for export purposes, submission of a certificate from a chartered accountant, and the failure of the original authority to consider substantial evidence and explanations provided by the appellant.

Adjudication and Appeal:
Despite the appellant's rebuttal of the allegations and grounds for contesting the demand, the original authority upheld the proposals in the Show Cause Notice. The appellant, aggrieved by this decision, appealed the matter. The appellate tribunal, after considering the rival contentions and the documents presented, found that the original authority had not adequately considered the certificate from the chartered accountant and had based its decision on assumptions and presumptions.

Decision and Remand:
In light of the above, the tribunal allowed the appeal by way of remand, directing the matter to be restored to the file of the original authority for de novo adjudication. Emphasizing the principles of natural justice, the tribunal instructed the authority to afford the appellant reasonable opportunities to produce necessary documents and evidence, ensuring a fair and thorough review of the case. The lower authority was instructed to pass a de novo speaking order within three months from the date of receipt of the tribunal's order, leaving all contentions open for further consideration.