Tribunal rules on service tax credit, upholds input credit, sets aside penalty, remands input services issue.

The Tribunal set aside the demand for service tax credit on construction activity due to limitation, maintained the demand for input credit but set aside the penalty, and remanded the issue of service tax credit on various input services for further adjudication. The appellant's appeal was disposed of accordingly with consequential reliefs.

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Issues involved:
1. Availment of service tax credit for construction activity at new premises.
2. Alleged wrongful input credit availed on invoices from another unit.
3. Availment of service tax credit on various input services without proof of payment.

Issue 1: Availment of service tax credit for construction activity at new premises:
The appellants, a subsidiary company, shifted their operations to a new factory premises after completing construction. They had obtained Central Excise and VAT registration for the new premises to commence production. The dispute arose when the service provider raised a bill for construction activity at the old premises, which the appellant paid and availed credit for in their returns. The authorities alleged that the credit was wrongly availed. The Tribunal held that the demand of credit was time-barred as the appellant had disclosed all details in their returns and cooperated with the department's verification requests. The Tribunal found no evidence of willful suppression of facts, thus setting aside the demand.

Issue 2: Alleged wrongful input credit availed on invoices from another unit:
Another allegation was regarding the wrongful input credit availed by the appellant on invoices from another unit for materials delivered to the new factory premises. The appellant reversed the credit amount before the issuance of the show-cause notice and informed the department. The Tribunal held that since the appellant had rectified the error voluntarily, the demand for interest and penalty on the amount was not sustainable. The penalty imposed was deemed unwarranted and was set aside.

Issue 3: Availment of service tax credit on various input services without proof of payment:
The third issue involved the appellant availing service tax credit on various input services without providing proof of payment to the service providers. The appellant claimed they could furnish the necessary documents to support the credit availed. The Tribunal opined that the appellant should be given a chance to establish their case by providing the required documents. This issue was remanded to the adjudicating authority for re-adjudication after affording the appellant a reasonable opportunity for a personal hearing.

In conclusion, the Tribunal modified the impugned order by setting aside the demand for service tax credit on construction activity due to limitation, maintaining the demand for the input credit but setting aside the penalty, and remanding the issue of service tax credit on various input services for further adjudication. The appeal was disposed of accordingly with consequential reliefs.

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