By TIOL News Service

MUMBAI, DEC 20, 2017: REVENUE is before the CESTAT against the order passed by Commissioner(A).

The facts are that proceedings were initiated against the respondent to deny them CENVAT credit of Rs.20,80,647/- availed on tax collected by provider of renting of immoveable property service between June 2007 and April 2008 on the ground that service provider was not registered under Service Tax Rules, 1994; had not deposited the tax with the government and that the consideration for the service had not been paid to the provider of service.

The Commissioner (Appeals-III), Pune had set aside the recovery confirmed by the original authority leading to this appeal.

The AR referred to rule 3(1) of the CCR, 2004 to justify the Revenue's stand of denial of credit.

The Bench observed that Revenue appeal, apparently had been made on an incorrect appreciation of the facts.

Inasmuch as the CESTAT noted that Respondent was occupying the property of an entity who had been subjected to proceedings by the Debt Recovery Tribunal which authority had directed the respondent to discharge tax obligation under Finance Act, 1994 and in accordance with those directions, the tax component of the transaction was being deposited by the respondent and the commercial component with the Tribunal.

It was further observed -

"5. A taxable service was being availed of and the tax dues had been discharged on behalf of the provider by a judicial order. There is no basis for Revenue to allege that the respondent was ineligible for credit. On the contrary, such frivolous proceedings are not only bereft of legality but would tend to bring tax administration to ridicule. Compounding this inappropriate act of the original authority is the patent non-application of mind on the part of the reviewing authority."

The Revenue Appeal was dismissed.

(See 2017-TIOL-4463-CESTAT-MUM)