2016 (2) TMI 940 - AT - Service Tax

CESTAT grants waiver for Co-op Bank on pre-deposit for exempted services under Notification 29/2004-ST

The Appellate Tribunal CESTAT MUMBAI ruled in favor of a Co-operative Bank seeking a waiver of pre-deposit related to exempted services. The Tribunal ... Cenvat credit apportionment under Rule 6(3) - exempted services - interpretation of Notification 29/2004-ST - pre-deposit waiver / stay of recovery - common input services and record keepingCenvat credit apportionment under Rule 6(3) - exempted services - interpretation of Notification 29/2004-ST - pre-deposit waiver / stay of recovery - Application for waiver of pre-deposit and stay of recovery of the confirmed liability of 6% or 8% of the value alleged to be exempted services was allowed. - HELD THAT: - On prima facie consideration the Tribunal found no justification for confirmation of demand with interest and penalties because the services rendered by the appellant (a co-operative bank) were not held to be exempted by Notification 29/2004-ST; the Notification only excludes from value the amount received towards interest on overdraft and cash credit facilities. Further, since Cenvat credit was claimed on common input services and records were not separately maintained, the Revenue sought apportionment under Rule 6(3), but the Tribunal accepted the view indicated in the earlier Tribunal order in Vaidyanath Urban Co-operative Bank Ltd. (Final Order No. A/1218/14 dated 14.07.2014) as covering the matter for the purposes of grant of stay. Having formed that prima facie view, the Tribunal exercised its power to stay recovery and waive the pre-deposit until disposal of the appeal. [Paras 3]Waiver of pre-deposit granted and recovery stayed until disposal of the appeal.Final Conclusion: The Tribunal granted stay of recovery and allowed waiver of the pre-deposit of the amount determined as 6% or 8% of the value of the alleged exempted services, holding prima facie that the services were not exempt under Notification 29/2004-ST and following a prior Tribunal decision; recovery is stayed until final disposal of the appeal. Issues:1. Waiver of pre-deposit of an amount confirmed as 6% or 8% of the value of exempted services rendered by the appellant.Analysis:The appellant, a Co-operative Bank, filed a stay petition seeking a waiver of pre-deposit of an amount confirmed as 6% or 8% of the value of exempted services rendered. The Revenue contended that the amount reduced from the tax liability on interest on over-draft and cash credit facilities constitutes exempted services, triggering a liability under Rule 6(3) of Cenvat Credit Rules, 2004. However, the Tribunal found no justification in confirming the demand with interest and penalties as the services provided by the appellant were not exempted by Notification 29/2004-ST. The Tribunal noted that the said Notification only excludes the value of amounts received for interest on over-draft and cash credit facilities. The Tribunal referred to a previous judgment in the case of Vaidyanath Urban Co-operative Bank Ltd. to support the appellant's position. Consequently, the Tribunal allowed the application for waiver of pre-deposit, staying the recovery until the appeal's disposal.This judgment revolves around the interpretation of the provisions of Rule 6(3) of Cenvat Credit Rules, 2004 concerning the liability arising from exempted services. The Tribunal examined whether the services provided by the appellant, a Co-operative Bank, fell under the purview of exempted services as contended by the Revenue. The Tribunal scrutinized the applicability of Notification 29/2004-ST to determine the scope of exempted services, specifically focusing on the exclusion of interest on over-draft and cash credit facilities. By referencing a prior judgment, the Tribunal established that the issue at hand was similar to a previously decided case, providing a basis for granting the waiver of pre-deposit to the appellant.In conclusion, the judgment by the Appellate Tribunal CESTAT MUMBAI addressed the request for waiver of pre-deposit concerning the liability arising from exempted services rendered by a Co-operative Bank. By analyzing the provisions of Rule 6(3) of Cenvat Credit Rules, 2004 and the applicability of Notification 29/2004-ST, the Tribunal found in favor of the appellant, ruling that the services provided did not fall under the category of exempted services. The reference to a previous judgment further supported the Tribunal's decision to grant the waiver of pre-deposit and stay the recovery pending the appeal's disposal.