Revenue neutrality in service tax dispute led to remand for fresh consideration of the assessee's credit-based plea.

A service tax demand required fresh examination because the assessee had raised a revenue-neutrality plea based on its status as an STPI unit exporting services and its entitlement to Cenvat credit, including cash refund under Rule 5 of the Cenvat Credit Rules. The authority had not recorded any finding on that contention, even though it went to the root of the matter. The impugned order was therefore set aside and the matter was remanded to the Commissioner for consideration of the revenue-neutrality issue.

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Issues: Whether the demand of service tax required reconsideration in view of the plea that the tax, if payable, would be available as credit and the dispute was revenue neutral.

Analysis: The appellant raised the specific contention before the adjudicating authority that it was an STPI unit exporting services, that it was availing credit of service tax paid by it, and that the credit would be refundable in cash under Rule 5 of the Cenvat Credit Rules, making the situation revenue neutral. The authority below had not recorded any finding on this plea. Since the issue went to the root of the matter and had not been examined, the matter required reconsideration.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for consideration of the revenue-neutrality plea.

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