By TIOL News Service

MUMBAI, OCT 31, 2015: WHILE partly allowing the appeal filed by the assessee, the CESTAT in its order dated 05.06.2015 - 2015-TIOL-1174-CESTAT-MUM held thus -

CENVAT credit availed on Input Services used in relation to manufacturing activity at Pune has no nexus with rendering of output service at Mumbai - Credit cannot be utilized for paying service tax liability on the renting of immovable property service provided in Mumbai : CESTAT [para 7, 8, 9]

Against this order, the assessee has filed a ROM application on the following grounds and prays that the demand of service tax and interest thereon be set aside:

(i) Applicant had submitted Service Tax Registration Certificate, Service Tax Returns, Service Tax Audit Reports and Copies of Debit Notes raised by appellant for rent for the immovable property at Worli and shown to audit teams. The final order was passed by Tribunal without offering any finding on these submissions on limitation.

(ii) The order was passed without taking cognizance of submission that the Commissioner of Central Excise, Pune has no jurisdiction to raise demand of service tax on renting of property situated at Mumbai,

(iii) Availment of Cenvat Credit in Pune factory is not in dispute, only its realization is in dispute. Since availment is not in dispute there can be no demand of interest. Final order has not given any finding on this issue.

(iv) Any modification in the final order will not amount to review of the order.

The Bench, after considering the submissions,gave its point-wise findings thus -

(i) As regards the first issue on limitation it was noted in the Tribunal order that department is not supposed to know each and every declaration made outside the Central Excise law. We also note that the Service Tax Registration Certificate, Service Tax Returns and Audit Report did not reveal that Cenvat Credit is being utilized to pay the service tax on the renting of property located at Mumbai. This issue came up in the audit report for the year 2013-2013 issued on 17.1.2013 and the show cause notice was issued on 18.10.2013. During the audit 100% of the invoices may not be seen by audit. The debit invoices do not indicate that the service tax is paid from the input service tax credit. Therefore there is no basis for setting aside the demand on limitation.

(ii) As regards the point of jurisdiction we have already held in our order that the service tax demand was confirmed on account of wrong utilization of the input service tax credit. Therefore there is no mistake in the order.

(iii) As regards the issue of interest we find if the appellant had not paid the service tax out of the input service tax credit, they would have had to pay the tax by cash. To this extent, the benefit of interest has accrued to them, therefore, interest is payable as held in the order. In view of the above, we find no mistake apparent on record in our order.

The ROM application was dismissed.

(See 2015-TIOL-2334-CESTAT-MUM)