2017 (10) TMI 802 - AT - Service Tax

CENVAT credit - tour operator service - rent-a-cab service - N/N. 1/2006 - Held that - the appellants have already reversed proportionate credit attributable to tour operator service and rent-a-cab scheme operator service and therefore the appellants are entitled to the benefit of abatement under N/N. 1/2006 in respect of tour operator service and rent-a-cab scheme operator service - In order to verify whether the appellants have actually reversed the proportionate service tax credit or not, this case needs to be remanded back to the original authority for verification of the same - appeal allowed by way of remand.

Summary

Issues:
- Appeal against rejection of benefit under Notification No.1/2006 for tour operator and rent-a-cab services
- Availment of CENVAT credit on input services without maintaining separate records
- Demand of differential service tax, interest, and penalty
- Appellant's contention of reversing proportionate credit and entitlement to abatement
- Remand for verification of credit reversal and benefit under Notification No.1/2006

Analysis:
1. The appeal was filed against the rejection of the benefit under Notification No.1/2006 for tour operator and rent-a-cab services. The appellant had availed abatement on these services but was denied the benefit due to the alleged availing of CENVAT credit on input services without maintaining separate records. The original authority demanded a differential service tax, interest, and penalty under Section 77. The Commissioner(Appeals) upheld this decision, leading to the present appeal.

2. The appellant contended that they had not taken credit on input services exclusively used for tour operator and rent-a-cab services. They argued that common input services like security, courier, and telephone services were availed as it was impractical to maintain separate accounts. They claimed to have reversed the credit attributable to these services via a general voucher. Citing various decisions, they asserted that since the credit was reversed, the abatement should not be denied.

3. The learned AR supported the findings of the impugned order, maintaining the denial of abatement under Notification No.1/2006. After hearing both parties and examining the records, the Tribunal found that the appellants had indeed reversed the proportionate credit linked to tour operator and rent-a-cab services. Consequently, the appellants were deemed entitled to the benefit of abatement under the notification. However, to verify the actual reversal of credit, the case was remanded to the original authority for further examination, following precedents from the Tribunal's earlier decisions.

4. In light of the above findings, the appeal was allowed by way of remand, and the stay application was disposed of. The appellants were granted the opportunity to present their case and produce relevant documents for verification. The Tribunal emphasized the need for a thorough examination to ensure the correct application of the benefit under Notification No.1/2006. The operative portion of the order was pronounced in open court on 31/08/2017.