2015 (3) TMI 87 - AT - Service Tax

CENVAT Credit - Whether CENVAT credit of service tax paid on input services can be taken when the service provider has paid the service tax with interest and has approched the Settlement Commission for settling the case - Held that - when the service provider had approached the Settlement Commission, the appropriate course of action by the Commissioner is to wait for the decision of the Settlement Commission or the decision of the adjudication proceedings if the Settlement Commission has rejected the application. Therefore, we consider that the adjudication order is premature - In the result, the impugned order is set aside and the matter is remanded to the adjudicating authority - Following decision of Indian Oil Corporation Ltd. Vs. CCE, Mumbai-II 2011 (6) TMI 520 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues involved:
1. Whether CENVAT credit of service tax paid on input services can be taken when the service provider has approached the Settlement Commission for settling the case.

Detailed Analysis:
The judgment addresses the issue of whether CENVAT credit of service tax paid on input services can be availed when the service provider has paid the service tax with interest and approached the Settlement Commission for resolution. The Tribunal referred to a previous case involving Indian Oil Corporation Ltd. vs. CCE, Mumbai-II, where it was highlighted that in a situation where the service provider has approached the Settlement Commission, the appropriate course of action is to wait for the decision of the Settlement Commission or the outcome of the adjudication proceedings if the Settlement Commission rejects the application. The Tribunal emphasized that the adjudication order in such cases would be premature, and it would be more suitable to remand the matter to the original adjudicating authority for further proceedings after the Settlement Commission's decision. The Tribunal concluded that the impugned order should be set aside at that stage and the matter remanded to the adjudicating authority for further action after the Settlement Commission's decision and completion of the adjudication process for the service provider.

Furthermore, the Tribunal highlighted the importance of considering the Settlement Commission's decision and the outcome of the adjudication process before making a final determination on whether the CENVAT credit can be taken. The judgment emphasized the need to follow a sequential process where the Settlement Commission's decision, if any, should be considered before proceeding with adjudication. The Tribunal stressed that the adjudication order should not precede the decision of the Settlement Commission or the completion of the adjudication process related to the service provider. The judgment underscored the significance of allowing the Settlement Commission to decide on the matter before reaching a final decision on the availability of CENVAT credit in such circumstances.