2014 (11) TMI 627 - AT - Service Tax

CENVAT credit - whether amount of services written of due to non receipt is amounting to exempted service - Held that - Service receivers did not pay the consideration and was written off. Tax was payable only on receipt of consideration during the relevant period and if a customer did not pay the consideration and the same is written off, the service tax would not be payable but the service as such cannot be considered as an exempted service. - Decided in favor of assessee. Demand of service tax on the ground that assessee filed to produce the copy of challans - Held that - The appellants did not have a copy of the challan, it may not be appropriate to demand the tax again. No doubt the challan copy should have been kept by the appellant for a period of five years and failure to do so would be violation of the provisions of law. But the demand for tax has to be in accordance with law and only when the tax has not been paid, the question of demanding the same would arise. Since ST-3 return was not available to be shown and it was not shown before the original authority also and demand has been confirmed only on the ground that appellant could not produce proof in the form of challan, we consider it appropriate that the matter should be remanded for verifying the payment particulars and confirmation that amount has not been paid. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
- Eligibility for CENVAT credit on input services like rent-a-cab, insurance, and event management services
- Demand for unutilized CENVAT credit with interest and penalty
- Demand for service tax on amounts written off due to non-payment by service receivers
- Demand for unpaid amount in one of the months
- Admissibility of CENVAT credit on rent-a-cab and insurance services for a BPO engaged in 24/7 operations
- Eligibility of event management services for promoting the business
- Merit of demand for CENVAT credit on amounts written off by service receivers
- Demand for unpaid amount due to lack of proof of payment in a particular period
- Decision to remand the issue of demand for the unpaid amount for fresh consideration

Eligibility for CENVAT credit on input services:
The judgment pertains to the appellant's eligibility for CENVAT credit on services like rent-a-cab, insurance, and event management services. The appellant, engaged in providing BPO services requiring round-the-clock operations, argued that transportation and insurance services were essential for employee welfare and business operations. The tribunal agreed that these services were integral to the appellant's business activity, making them eligible for CENVAT credit. Additionally, event management services were deemed necessary for business promotion, further supporting the appellant's case.

Demand for unutilized CENVAT credit and service tax on amounts written off:
The tribunal addressed the demand for unutilized CENVAT credit, interest, and penalty, along with service tax on amounts written off due to non-payment by service receivers. It found that the demand for CENVAT credit on amounts written off lacked merit, as service tax is payable only upon receipt of consideration. The tribunal ruled that non-payment by customers resulting in write-offs did not make the service exempted. Hence, this demand was not sustainable.

Demand for unpaid amount and lack of proof of payment:
Regarding the demand for an unpaid amount due to the appellant's inability to produce proof of payment in a specific period, the tribunal noted that the appellant had provided correspondence and bank statements to support its claim. It criticized the original authority for not considering the evidence presented. The tribunal emphasized the importance of verifying payment particulars through ST-3 returns and remanded the issue for fresh consideration. It highlighted that the demand for tax should align with legal provisions and be based on actual non-payment.

Decision and remand for fresh consideration:
The tribunal set aside other demands and penalties, except for the demand related to the unpaid amount of Rs. 19,07,351. It remanded this specific issue for the original authority to reevaluate, emphasizing the need to verify payment details and provide the appellant with a fair opportunity to present their case. The judgment concluded by pronouncing the operative portion in open court, ensuring transparency in the decision-making process.