Tribunal overturns decision on service tax credit denial, grants appeal with consequential relief.

The Tribunal allowed the appeal, finding that the Commissioner's decision to uphold the order based on a ground not raised in the show cause notice was incorrect. The Tribunal held that the denial of credit for service tax paid on outward transportation was not justified. Citing a judgment, the Tribunal ruled that such credit was admissible without restrictions until 01.04.2008. Consequently, the appeal was granted, and the appellants were provided with consequential relief, with both the stay petition and appeal being allowed.

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Issues:
1. Denial of credit of service tax paid on TR-6 Challans
2. Imposition of penalty under Section 78 of Finance Act, 1994

Analysis:
1. The case involved the denial of credit of service tax paid on TR-6 Challans by the appellant. The original adjudicating authority held that credit could not be taken on the basis of TR-6 Challans by the receiver of service before 15.06.2005. However, the learned Commissioner allowed the credit but upheld the order on the ground that credit for service tax paid on outward transportation was not admissible. The Tribunal found that the show cause notice only raised the issue of credit based on TR-6 Challans, and the appellant was not allowed to raise the point regarding outward transportation service credit. The Tribunal held that the Commissioner's decision to uphold the order based on a ground not raised in the show cause notice was incorrect, and the appeal needed to be allowed on this ground.

2. The Tribunal noted that the total service tax availed included an amount related to outward transportation, which was only Rs. 3,855. The Tribunal referred to a judgment of the High Court of Karnataka in the case of ABB Limited, Vadodara, which established that the credit of service tax paid on outward transportation service was admissible up to 01.04.2008 without restrictions. As the credit taken was found to be admissible and the only ground in the show cause notice had been overruled by the Commissioner, the Tribunal allowed the appeal and granted consequential relief to the appellants. The stay petition and appeal were both allowed based on these findings.

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