Verification of service tax payment is essential before deleting tax, penalty and interest; unproven prior payment led to remand.

Acceptance of a service tax payer's plea of prior payment without verifying proof of deposit was unsustainable. The appellate authority had set aside tax, penalty and interest while also stating that the Assistant Commissioner would verify the matter and treating the tax as deemed paid, but the record did not establish actual payment. The order-in-appeal was therefore set aside and the matter remanded to the Commissioner (Appeals) for fresh decision after hearing the respondents.

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Issues: Whether the order-in-appeal could be sustained when the respondents' claim of prior payment of service tax was accepted without verification of proof of deposit, and whether the matter required fresh consideration.

Analysis: The dispute concerned service tax liability for the period when the respondents were stated to be service receivers from GT operators. The record did not contain material establishing payment of the tax, yet the appellate authority accepted the respondents' plea, observed that the Assistant Commissioner would verify the matter, and at the same time treated the tax as deemed to have been paid. The setting aside of tax, penalty, and interest without first ascertaining proof of payment was held to be unsustainable.

Conclusion: The order-in-appeal was set aside and the appeals were remanded to the Commissioner (Appeals) for fresh decision after hearing the respondents.

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