Tribunal cannot pass orders based on sentiments - High Court remands matter to original authority
THE assessee is a Bank. The dispute is about reversal of CENVAT Credit on input services used for providing dutiable and exempted services. At the material period, there was a rule which allowed full credit on certain input services (rule 6(5)), though they are used for exempted services and another rule which stipulated that the assessee is entitled to utilize credit only to the extent of 20% of their output tax liability. It is the case of the revenue that the assessee had utilized credit in excess of 20% limit and also irregularly classified certain services to take the benefit of full credit.
When the matter reached Tribunal, vide its order reported in 2014-TIOL-1945-CESTAT-BANG, CESTAT held that as per the details furnished by the appellant and certified by the Chartered Accountant, the appellant had not availed CENVAT Credit in excess of 20% and also the entire demand is barred by limitation. On the second issue, the Tribunal, though thought of remanding the case, made a suggestion to the counsel for the assessee that, if the appellant pays the amount due for the normal period, the matter can be closed even though in Tribunal's opinion appellant did have a case in their favour. Accordingly, the assessee came forward to pay RsRs.3,71,501/- and interest of Rs.4,025/ which was accepted by the Tribunal. While disposing the case, the Tribunal observed:
We also agree that the sentiment expressed in the letter even though they do not agree with the contention of the Department, in order to cooperate with the Department and buy peace and to bring an end to the litigation which involves very small amount, the appellant has chosen to pay the same.
Aggrieved by the above, revenue filed appeal before the High Court and the High Court remanded the matter to the original authority with the observation that “the Tribunal proceeded to pass the order based on sentiments which is uncalled for, particularly, while adjudicating the revenue matters”.
It will be interesting to see if the revenue can finally get more than the amount confirmed by the CESTAT or even lose that.