Tribunal partially allows appeal, redistributes rent based on space usage, reduces penalty, directs further proceedings.

The Tribunal partially allowed the appeal, finding certain services wholly attributable to taxable output services and setting aside the demand related to those services. The issue of renting premises was remanded for further assessment, with directions to redistribute rent based on space usage for exempt activities. The penalty was reduced due to the appellant's cooperation and lack of deliberate default. The appellant was directed to appear before the adjudicating authority within a specified period for further proceedings.

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Issues:
Cenvat credit availed on common services for rendering taxable output services and clearance of exempt goods.

Analysis:
The appellant, a publisher of law books and CDs, also provides online information and database services. The issue revolves around the utilization of common input services for manufacturing exempt goods and providing taxable output services without paying the required percentage or availing Cenvat credit as per rules. The show cause notice proposed to bifurcate common input services for a specific period, leading to a demand of a certain amount along with penalties and interest. The appellant contested the notice, claiming that certain services were exclusively attributable to taxable output services. They admitted liability for some common services and made payments accordingly before the order in appeal.

On appeal before the Commissioner, the appellant argued that services like Internet service and content service were solely for taxable services, and renting of immovable property was exclusively for taxable output services based on separate agreements. However, the Commissioner held that these services could not be exclusively used for taxable services. The appeal was dismissed based on the Commissioner's findings.

The appellant then appealed to the Tribunal, arguing that certain services were wholly attributable to taxable output services and should not be considered common input services. They also provided details about the renting of premises and requested a waiver of the balance demand and penalty. The revenue department supported the impugned order and sought dismissal of the appeal.

The Tribunal found that Internet service, web-hosting service, and content service were wholly attributable to taxable output services, setting aside the demand related to these services. Regarding renting of premises, the Tribunal remanded the issue to ascertain the space occupied for exempt activities and directed a redistribution of rent accordingly. The penalty was reduced considering the appellant's cooperation and lack of deliberate default or misconduct.

In conclusion, the appeal was partially allowed and partially remanded. The appellant was directed to appear before the adjudicating authority within a specified period for further proceedings.

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