Factual reconciliation of service tax receipts and Cenvat credit eligibility led to remand for fresh adjudication.

Service tax demand based on discrepancies between balance sheet receipts and ST-3 returns required fresh reconciliation because the figures were said to arise from different accounting bases and the record needed verification of receipts, advances and tax payments. The demand was set aside and remanded for fresh adjudication. Denial of Cenvat credit claimed alongside abatement under Notification No. 26/2012-ST also turned on factual verification, including eligibility and nexus with output services, so it was likewise remanded for reconsideration. The impugned order was annulled and the matters were returned for a fresh decision after opportunity to produce supporting documents and evidence.

---

---

Issues: (i) whether service tax demand based on differences between receipts reflected in the balance sheet and ST-3 returns required fresh verification and reconciliation; (ii) whether denial of Cenvat credit stated to have been availed while claiming benefit under Notification No. 26/2012-ST dated 20.06.2012 required reconsideration.

Issue (i): whether service tax demand based on differences between receipts reflected in the balance sheet and ST-3 returns required fresh verification and reconciliation.

Analysis: The difference between the two sets of figures was claimed to arise from the use of different accounting bases, with the balance sheet prepared under AS-7 and the returns filed under the point of taxation framework. As the record required reconciliation of receipts, advances, and tax payment particulars, the matter could not be finally determined on the existing material.

Conclusion: The demand on this issue was set aside for fresh adjudication after giving the assessee an opportunity to produce documents and evidence.

Issue (ii): whether denial of Cenvat credit stated to have been availed while claiming benefit under Notification No. 26/2012-ST dated 20.06.2012 required reconsideration.

Analysis: The dispute turned on whether the assessee was entitled to Cenvat credit on input services despite availing abatement and whether the requisite nexus with output services could be established. As these were factual questions requiring verification of records, the issue was not suitable for final determination without a fresh examination by the adjudicating authority.

Conclusion: The denial of Cenvat credit was set aside and the matter was remanded for reconsideration.

Final Conclusion: The impugned order was annulled and all three appeals were remitted to the Commissioner for fresh decision after granting a reasonable opportunity of hearing and production of supporting material.

Ratio Decidendi: Where the tax demand and Cenvat credit dispute depend on factual reconciliation and verification of records, the proper course is remand for fresh adjudication after affording an effective opportunity of hearing.

---