2014 (7) TMI 664 - HC - Service Tax

Waiver of the pre-deposit - cenvat credit - discrepancy in duty paying documents - services by club or association - insurance auxiliary services - Held that - The Tribunal in this aspect, as it appears from the aforesaid reports, consistently held that if the particulars are contained in the documents as required to be done by proviso to sub-rule (2) of rule 9, this will not deny the CENVAT credit on hyper technicalities. This court must record that the Tribunal must record the reasons either for allowing the waiver or refusal to waiver on the materials as well as the pleadings made before it. Mere quoting the provision does not absolve the Tribunal from its responsibility and obligation to record the reasons on each and every issue that has been raised before it. Since this court finds that the application seeking waiver is disposed of solely on the ground that the availability of CENVAT credit on the basis of the documents not prescribed under sub-rule (1) of rule 9 of the CENVAT Credit Rules 2004 this court, therefore, finds that the said order suffers from illegality and/or infirmity. - matter remanded back for reconsideration - Decided in favour of assessee.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding waiver of pre-deposit of duty.

Analysis:
The petitioner challenged a portion of the order dated October 7, 2013, passed by CESTAT, Kolkata, Eastern Zonal Bench, related to waiver of duty deposit. The CESTAT disposed of two applications - one for correction of mistakes and another for waiver of duty deposit. While the petitioner was satisfied with the correction application outcome, they were aggrieved by the direction to deposit 25% of service tax and 10% of CENVAT credit amount. The dispute arose as the assessing authority categorized the services provided by the petitioner differently from what the petitioner claimed, leading to an appeal before CESTAT. The petitioner argued that technicalities should not obstruct justice, citing judgments supporting their stance. They also highlighted financial incapacity as a criterion for undue hardship, which the Tribunal allegedly did not address. The respondent authorities contended that the petitioner provided "insurance auxiliary services," justifying the reversal of CENVAT credit. The Tribunal granted a partial waiver based on the documents presented, which the respondents defended.

The CESTAT based its decision on the petitioner's use of non-prescribed documents for claiming CENVAT credit, despite considering financial hardship without factual findings. The court emphasized adherence to prescribed methods for availing CENVAT credit but noted that justice should not be hindered by technicalities if essential requirements are met. It found insufficient evidence to deny the credit based on the documents used. While Tribunal judgments are not binding, they hold persuasive value, especially in interpreting technical aspects. The court stressed the importance of recording reasons for decisions, urging the Tribunal to justify its actions thoroughly. As the waiver application was rejected solely due to non-prescribed documents, the court deemed the order illegal and set it aside. The Tribunal was instructed to reconsider the application, taking into account all relevant factors, documents, and pleadings, ensuring a lawful decision within three weeks.

In conclusion, the court quashed the previous order, directing the Tribunal to review the waiver application with full consideration of the facts and legal requirements. The court refrained from delving into the application's merits, emphasizing the Tribunal's independent decision-making process. The writ petition was disposed of without imposing any costs, maintaining neutrality in the matter.