By TIOL News Service

MUMBAI, SEPT 27, 2015: THE appellant is a firm providing services of practising Chartered Accountant and Management Consultancy Services to clients in India and abroad. The appellants were operating from various locations in Mumbai, each with a separate Service Tax registration number and the accounting operations were carried out from Worli address.

Demand notices came to be issued to the appellant alleging wrong availment of CENVAT credit on account of the following -

+ Providing exempted services as well as taxable services but not maintaining separate records;

+ Credit availed on input services on the strength of invoices raised on the registered unit at Worli whereas the credit was taken in another registered unit at Mafatlal House, Mumbai .

The CCE, Thane-I confirmed the demands and imposed penalties and interest.

In appeal, the Bench after considering the submissions held -

++ O-in-O confirming demands of Rs.1,92,10,120/-&of Rs.2,78,23,485/- were set aside.

++ The demands of Rs.31,25,737/- and Rs.5,65,600/- on account of allegedly wrongly addressed invoices were also set aside and CENVAT credit was allowed but the matter was remanded only for purpose of verification that the input services were used in Mafatlal House Office for providing the output services.

We reported this order as 2015-TIOL-366-CESTAT-MUM.

The Revenue is of the view that there is an error apparent in the above order and have, therefore, filed a ROM application.

The grounds are -

•  On the one hand, CESTAT has set aside the demand of Rs.31,25,737/- and Rs.5,65,600/- and allowed the CENVAT credit and on the other hand CESTAT has remanded the matter to the adjudicating authority. Thus, there is a contradiction in the CESTAT findings and,

•  For verification in terms of Tribunal's order, the respondent submitted certificates from major service providers namely M/s Patmans & G Hospitality Pvt. Ltd., M/s Deloitte Consulting India Ltd., and M/s Deloitte & Touch Assurance & Enterprise Risk Service India Pvt. Ltd. The certificates which have been submitted now by the respondent for verification were not presented by them before the adjudicating authority and not discussed in the Orders-in-Original as well.

Another certificate was issued by M/s Blue Dart after 9/10 years of the issue of the invoices. In the 5 th Certificate date of issue of certificate is not mentioned. Hence, the verification does not lead to the conclusion that the services were used in the Mafatlal House.

The Benchin a caustically worded order observed -

+ As regards the first issue we find that our Order is very clear. The order allows the CENVAT credit in principle. It was remanded only to be verified by the adjudicating authority that the input services in respect of which credit was availed were actually received by them and utilized by them. We find no contradiction in our order.

+ As regards the CENVAT credit availed on the basis of certificates of service providers, the ld. Counsel has shown us letter dt. 13.11.2009 submitted in reply to the show cause notice dt. 19.10.2007. It clearly indicates that the letters obtained from the service providers were submitted under the said letter dt. 13.01.2009. Further, this letter is shown received by Shri S.N.Bhagwat, Inspector of Central Excise (Adjudication), Thane-I, Commissionerate. Therefore, it appears that the Commissioner has filed this ROM without caring to see his own records. Reasons such as date of issue of certificate not being mentioned cannot be a reason to deny the substantial benefit. It was for the authorities to verify whether the services were received and actually utilized.

+ We fail to appreciate the grounds on which ROM is filed when the matter was simply remanded for verifying the actual use of input services. Certificates having been produced earlier as mentioned above, there is no ground to deny the CENVAT credit which was sought to be availed on the basis of these certificates.

The ROM application filed by the Commissioner of Service Tax, Mumbai was rejected.

In passing : Obviously, the remand proceedings are yet to fructify and, therefore, this is not the last that we hear of this case….

(See 2015-TIOL-2038-CESTAT-MUM)