2016 (4) TMI 778 - AT - Service Tax

Demand of ineligible Cenvat credit - Telecommunication Service - Availed Cenvat credit on the basis of improper documents - No documentary proof furnished by appellant evidencing payment of service tax by the service providers - Held that - in view of the apparently conflicting stand adopted by the appellant and by the Commissioner (Appeals), it is but proper that the matter is remitted back to the Adjudicating Authority as the allegations require factual verification. - Matter remanded back

Summary

Issues:
Appeal against order demanding ineligible CENVAT credit and imposing penalty under CENVAT Credit Rules, 2004.

Analysis:
The case involved M/s. Bharat Sanchar Nigam Limited appealing against an order demanding ineligible CENVAT credit and imposing a penalty under CENVAT Credit Rules, 2004. The appellant was a provider of taxable services under the category of "Telecommunication Service." The dispute pertained to availing CENVAT credit of ?5,79,972 based on improper documents. The Adjudicating Authority had ordered the recovery of the credit and imposed a penalty, which was upheld by the Commissioner (Appeals). The appellant contended that the service receipt, payment of service tax, and input invoices were not disputed during the audit. The appellant, being a Government undertaking, argued no intention to evade tax and presented documentary evidence supporting their case.

The Revenue, represented by Ms. Indira Sisupal, contended that the appellant contravened CENVAT Credit Rules by availing credit without due verification and diligence, alleging willful evasion of duty. The core issue was whether the documents bore the correct service tax registration number and if the appropriate tax was paid. The Appellate Commissioner noted the lack of proof of service tax payment by service providers, leading to the demand for improper credit. The appellant and the Commissioner (Appeals) had conflicting stands on the submission of proof of payment during the appeal, necessitating a remand for factual verification.

The Tribunal allowed the appeal by remanding the matter to the Adjudicating Authority for verifying the genuineness of the appellant's claim. Emphasizing adherence to natural justice principles, the Tribunal highlighted the appellant's status as a Public Sector Undertaking, suggesting a lenient view on penalty and the invocation of a larger period. The decision aimed at a fair assessment considering the appellant's governmental nature.