Verification of duty-paying documents required before Cenvat credit and tax liability were recomputed, with interest and penalties to follow.

Where service tax liability and Cenvat credit admissibility depend on verification of primary documents and connected valuation issues, the matter must be reopened for fresh determination. The Tribunal directed reconsideration of the tax liability in line with earlier remand directions, with specific verification of duty-paying documents before allowing credit. Interest and penalties were to be examined only after recomputation of the liability.

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Issues: Whether the demand and the assessee's Cenvat credit claim required reconsideration by the Commissioner with verification of the duty-paying documents, and whether interest and penalties were to be examined after such reconsideration.

Analysis: The impugned order had confirmed only a part of the demand though the show cause notice had proposed a higher liability. The matter also involved the assessee's challenge confined to inclusion of the value of land in the taxable value, along with the Revenue's objection that Cenvat credit had been allowed without verification of relevant documents. In these circumstances, the proper course was to send the matter back for fresh determination of the correct tax liability in line with the earlier remand directions, with a specific direction to verify the duty-paying documents before allowing credit. The Tribunal further directed that interest and penalties would be considered only after the recomputation of liability.

Conclusion: The matter was remanded to the Commissioner for reconsideration of the tax liability and Cenvat credit claim, with verification of documents, and for fresh consideration of interest and penalties thereafter.

Ratio Decidendi: Where the quantification of service tax liability and admissibility of Cenvat credit depend on verification of primary documents and connected valuation issues, the assessment must be reopened for fresh determination before consequential interest and penalty are decided.

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