Transitional credit rejection set aside for ignoring documentary proof of service tax payment and remanded for fresh consideration.

Transitional credit could not be denied where the record showed payment and deposit of service tax in relation to the lease transaction, including a certificate confirming deposit, and the appellate authority failed to consider that material. The High Court held that this omission reflected non-application of mind and that the rejection order was unsustainable on the reasons recorded. The impugned order-in-appeal and order-in-original were quashed, and the matter was remanded for de novo consideration after granting the petitioner a personal hearing.

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Issues: Whether the rejection of transitional credit and the appellate affirmation thereof were sustainable when the material evidence supporting payment and deposit of service tax was not duly considered, warranting quashing of the impugned orders and remand for fresh consideration.

Analysis: The claim for transitional credit was founded on materials showing that service tax had been paid in relation to the lease transaction and that the tax had been deposited in the Government treasury. The record also contained a certificate from CIDCO confirming such deposit. The impugned appellate order proceeded without due consideration of this documentary evidence and thus disclosed non-application of mind. In these circumstances, the denial of credit could not be sustained on the basis recorded in the orders under challenge.

Conclusion: The impugned order-in-appeal and order-in-original were quashed and the matter was remanded for de novo consideration after granting the petitioner a personal hearing.

Ratio Decidendi: An order rejecting transitional credit is unsustainable where it ignores relevant documentary evidence and fails to record a reasoned consideration of the material bearing on eligibility.

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