M/S. State Bank of India, Bartolla Street Branch Vs. Commissioner of Service Tax, Kolkata - Court Judgment

Dr. D.M. Misra, J.

1. This is an Application seeking waiver of predeposit of an amount of Rs.5.98 lakh and equal amount of penalty imposed under Section 78 of the Finance Act, 1994.

2. At the outset, ld. Advocate for the Applicant submits that the Applicant is a public sector bank and availed CENVAT Credit on the input services used for exempted services as well as taxable services during the period from 01.04.2008 to 31.03.2009. The ld. Advocate also submits that as per Rule 6(3)(d) of the CENVAT Credit Rules, 2004, a service provider is allowed to reverse the credit availed on the input services used in providing the exempted services. He fairly admits that they had neither filed a reply to the show cause notice nor appeared in the personal hearing before the lower authorities. He also submits that in the event, the liability of CENVAT Credit is calculated as per the provisions of Section 6(3)(d) of the CENVAT Credit Rules, 2004, their liability would not exceed Rs.4,000/-.

3. Per contra, ld. AR for the Revenue submits that the Applicant had neither appeared before the Adjudicating Authority nor filed a reply to the show cause notice, resulting into passing the Order without hearing them. He also submits that the Applicant themselves at para IX of their Grounds of Appeal, accepted that their total liability would be Rs.61,920/-. He also submits that since they had neither appeared before the lower authorities nor placed evidences/documents before them, he has no objection in remanding the matter to the authorities below. However, he submits that before remanding the case, the Applicant be put into terms.

4. After hearing both sides for some time, we find that the Appeal itself could be disposed of, at this stage. Hence, with the consent of both sides, the present Appeal is taken up for disposal.

5. We find that undisputedly, the Applicant had availed the CENVAT Credit on the input services that had been utilized towards the discharge of the dutiable as well as exempted services. It is the claim of the Appellant that in view of the provisions contained in Rule 6(3)(d) of the CENVAT Credit Rules, 2004, they would be required to reverse the service tax involved on input service used for providing exempted service would not be more than Rs.4,000/-. We find that the Appellants claim could not be examined by the authorities below, as they failed to participate in the proceeding. Also, from the record, we find that the Appellant, although a public sector undertaking, paid little heed to the notices issued by the Department. We also find that the Appellant had not submitted reply to the notices nor they had filed any written submission before the ld. Commissioner (Appeals), even though they had promised to do the same. Accordingly, we agree with the ld. AR for the Revenue that the Appellant be put into terms before remanding the matter. Keeping in view that the Appellant themselves have admitted their liability as Rs.61,920/- being mentioned in the Grounds of Appeal, we direct the Appellant to deposit the said amount of Rs.61,920/-(Rupees sixty thousand nine hundred and twenty) within four weeks from the date of communication of this Order and report compliance directly to the Adjudicating Authority. The Adjudicating Authority after recording the compliance and after taking into consideration the evidences/documents, if any, that would be filed by the Appellant, would proceed to decide the case, afresh. Further, we direct the Appellant to furnish their reply to the Notice along with the evidences, within a period of two weeks from the date of communication of this Order. Ld. Adjudicating Authority thereafter, proceed with the adjudication. Needless to mention that a reasonable opportunity of hearing be granted to the Appellant before deciding the case, afresh. In the result, the impugned Order is set aside and the matter is remanded to the Adjudicating Authority for deciding all issues, afresh. Stay Petition disposed of.