2018 (2) TMI 1187 - AT - Service Tax

Tribunal overturns denial of service tax credit due to lack of evidence in show cause notice.

The Tribunal set aside the Commissioner's order denying a telecommunication service provider's service tax credit for the period April to September 2004. ... CENVAT credit - denial on the ground that they have not filed proper ST-3 return for the relevant period - Held that: - Admittedly the impugned order proceeded in a summary manner to deny the credit by simply recording that the services are not covered under the definition of input services and, hence, they are allowed for credit. Even, a plain perusal of the various input services like security services, electrical works, repair and maintenance, mobile charges, advertisement charges, auditor charges etc. will show that these are with reference to business of the appellant and provision of taxable output service which in the present case is telecommunication service - the appellant availed credit based on large number of duty paid documents. They did submit details in a consolidated summary. It is open to the Jurisdictional Authorities to verify each one of the document. No useful purpose will be served by remanding the matter again as the dispute relates to period which is 14 years before - appeal allowed by way of remand. Issues:Dispute over service tax credit for the period April to September 2004 due to non-filing of required statutory return in form ST-3 as per Rule 7 of Service Tax Rules, 1994.Analysis:The appellant, a telecommunication service provider, appealed against the order of the Commissioner, LTU, New Delhi, dated 21/11/2013, regarding the denial of service tax credit amounting to Rs. 62,61,059/- for the period April to September 2004. The dispute arose because the appellant did not file the required statutory return in form ST-3 as per Rule 7 of Service Tax Rules, 1994. The Original Authority found that the appellant failed to submit returns before the jurisdictional Superintendent, as prescribed, and took credit for services not consumed in relation to rendering taxable output services. The appellant contended that the denial of credit was based on grounds beyond the non-filing of proper ST-3 return and provided detailed evidence to support their claim. The appellant argued that the impugned order did not consider the evidence submitted and passed summary findings without justification. The appellant, a Government of India Undertaking, asserted that all credits availed were related to providing taxable output services, and the order imposing penalties was contested as well.The Tribunal noted that while the initial proceedings were for non-filing of returns, the denial of credit was based on the appellant's failure to provide documentary evidence supporting their claim for input service credits. The Tribunal observed that the impugned order summarily denied the credits without thorough consideration of the evidence submitted by the appellant. The appellant's services, such as security services, electrical works, repair and maintenance, mobile charges, advertisement charges, and auditor charges, were found to be related to their business and provision of taxable output service, i.e., telecommunication service. The appellant had availed credit based on a significant number of duty paid documents, and although they submitted details in a consolidated summary, the Authorities did not verify each document. The Tribunal concluded that the impugned order lacked a detailed proposal in the show cause notice before ordering the denial of credit, and thus, set aside the order and allowed the appeal. The Tribunal emphasized that the denial of credit was not supported by the impugned order and could not be upheld on fact or law, leading to the appeal being allowed.