2018 (10) TMI 98 - AT - Service Tax

CENVAT Credit - input services - boarding and lodging charges - it was the case of Revenue that appellant had not produced any document before him to establish the linkage between the input and output service availed and rendered by the appellant respectively Held that - I fail to understand if those documents are still available with the appellant to be produced before this appellate Tribunal, though cannot be taken as additional evidence produced at this end, why it failed to produce those before the adjudicating authority and why the Commissioner (Appeals) had not even considered the sample copy of invoices produced before him and not given any finding on those. Admittedly, Rule 9(5) and (6) have put the burden of proof regarding admissibility of cenvat credit on the provider of output service but before utilisation of cenvat credit accumulated in once account, there is no procedure available whereby an appellant can take prior approval of availment of such credit from the competent authority. It is, therefore, equally true that onus lies on the department to justify that appellant s availment and utilisation of cenvat credit was admissible or inadmissible. In the instant case the appellant was noticed for availment of inadmissible credit on the ground that hotel accommodation was taken for personal use of its employees. This appears to be bald allegation without any verification or scrutinisation of purpose for which accommodation was taken in the hotel by the appellant company for its employees - Scrutinisation of bills and its admissibility as piece of evidence, though permissible under the law, could never be done at this end since the same would amount to mini-adjudication and not disposal of appeal. The Commissioner (Appeals) can exercise power vested with adjudicating authority in accepting evidence and making further enquiry as he deems proper after providing opportunity to the appellant to establish and justify the nexus between the input and output services concerning admissibility of cenvat credit on tax paid for hotel and lodging accommodation. The order passed by the Commissioner (Appeals) is set aside - matter is remanded back to him for fresh adjudication - appeal allowed by way of remand.

Summary

Issues:
Confirmation of inadmissible credit against boarding and lodging charges leading to tax liability, interest, and penalty.

Analysis:
The case involves the appellant company availing cenvat credit against boarding and lodging expenses, leading to a dispute regarding the admissibility of such credit. The appellant contested the legality of the credit availed against boarding and lodging charges amounting to `14,58,075/-. The order-in-original confirmed the entire tax liability, interest, and penalty invoking the extended period, a decision upheld by the Commissioner (Appeals).

During the appeal process, the appellant's counsel argued that the appellant had provided invoice copies and correspondence with the hotel to establish the nexus between input and output services. However, the Commissioner (Appeals) did not provide any findings on the evidence presented. The appellant also attempted to justify the long hotel stay for organizing an event based on its significance and preparatory requirements.

Upon review, it was noted that the appellant failed to produce documents before the adjudicating authority to establish the linkage between input and output services. The Commissioner (Appeals) did not consider the sample invoices provided, raising questions about the lack of findings on the matter. The burden of proof regarding the admissibility of cenvat credit lies with the provider of output service, but the department must also justify the admissibility or inadmissibility of the credit.

The appellant was accused of availing inadmissible credit based on the assumption that hotel accommodation was for personal use. However, without proper verification or scrutiny of the purpose of the accommodation, such allegations remain unsubstantiated. The nature of the appellant's business, involving event management services, necessitates accommodation at various locations chosen by service recipients. The Commissioner (Appeals) was empowered to conduct further inquiry to establish the nexus between input and output services for determining the admissibility of the cenvat credit.

In conclusion, the order of the Commissioner (Appeals) was set aside, and the matter was remanded for fresh adjudication to allow for a proper examination of the evidence and justification of the credit availed against boarding and lodging charges.

Judgment Outcome:
The order of the Commissioner (Appeals) was set aside, and the matter was remanded for fresh adjudication to establish the nexus between input and output services concerning the admissibility of cenvat credit on tax paid for hotel and lodging accommodation.