Reversal of CENVAT Credit Supports Abatement Claim for Tour Operator Service Tax Relief

Reversal of CENVAT credit was treated as equivalent to non-availment of credit for purposes of abatement under the applicable service tax notification. The dispute concerned a taxable tour operator service provider that had claimed abatement while paying tax on the reduced value, and the benefit was sought to be denied only because credit had earlier been taken. Since the credit was reversed before decision, the abatement could not be refused on that ground, and the denial was held unsustainable. The service tax relief claimed by the assessee was restored.

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Issues: Whether the benefit of abatement under the relevant notification could be denied on the ground that CENVAT credit had been availed, where the credit was subsequently reversed.

Analysis: The Appellant was providing taxable tour operator service and had claimed abatement under the applicable notifications while paying service tax on the reduced taxable value. The record showed that the CENVAT credit earlier taken had been reversed before the dispute was decided. Reversal of credit was treated as equivalent to non-availment of credit, and the benefit of abatement could not be refused on that ground.

Conclusion: The denial of abatement was unsustainable and the issue was decided in favour of the Appellant.

Final Conclusion: The impugned order was set aside and the service tax relief claimed by the Appellant was restored.

Ratio Decidendi: Reversal of CENVAT credit amounts to non-availment of credit, so abatement under the notification cannot be denied solely for prior availment once the credit has been reversed.

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