2017 (7) TMI 644 - AT - Service Tax

Remand for Verification of Input Services Date & Abatement Eligibility under Notification

The Tribunal remanded the case to verify if input services were received and used before 1.3.2006 for output services prior to that date. If verified ... CENVAT credit - rent-a-cab service - abatement - Whether the CENVAT Credit availed by the appellant in respect of the services received prior to 1.3.2006 is admissible when the same was taken after 1.3.2006 and whether consequentially the appellant is entitled for the abatement provided under N/N. 1/2006-ST in respect of their services of rent a cab? - Held that: - the notification shall not apply only in a case where the cenvat credit of service tax was availed in respect of that input services which was used for providing taxable service on which the abatement was claimed in terms of N/N. 1/06-ST - even though the credit was availed on or after 1.3.2006 but it pertains to the period prior to 1.3.2006. The services were used before 1.3.2006 for output service which was provided before 1.3.2006. The benefit of abatement under N/N. 1/2006-ST available on the output service provided on or after 1.3.2006 cannot be disputed. The factual aspect of receipt of input service prior to 1.3.2000 and used in the services provided before 1.3.2006 was not verified properly by the lower authority, therefore the matter needs to be remanded - appeal allowed by way of remand. Issues involved:Whether Cenvat Credit availed by the appellant for services received prior to 1.3.2006 is admissible when taken after 1.3.2006 and if the appellant is entitled to availment under Notification No.1/2006-ST for rent a cab services.Analysis:The appellant contended that the invoices for which credit was taken pertained to the period before 1.3.2006, citing Notification No.9/2004-ST and No.12/2004-ST, which allowed Cenvat credit without any bar. They argued that the service on which credit was availed was used before 1.3.2006, not for output service after that date, thus complying with conditions. Legal judgments like Shapoorji Pallonji & Co. Ltd and Santosh Associates were cited in support.The Revenue argued that after 1.3.2006, availing Cenvat credit was barred to claim exemption under Notification No.1/2006-ST. They maintained that since the appellant took credit post-1.3.2006, they were ineligible for abatement under the said notification.The Tribunal examined the exemption Notification No.1/2006-ST, which allowed abatement for renting a cab service at 40%. The Revenue claimed the appellant violated a condition by availing Cenvat credit on input service, rendering them ineligible for abatement. However, the Tribunal interpreted the condition as applicable only if credit was taken for services used to provide the taxable service on which abatement was claimed. They agreed with the appellant's argument that although credit was taken after 1.3.2006, it pertained to services used before that date for output service provided earlier. As proper verification was lacking, the matter was remanded to verify if input services were received and used before 1.3.2006 for output services prior to that date. The Tribunal concluded that if such verification is satisfactory, the appellant should not be denied abatement under Notification No.1/2006-ST for output services post-1.3.2006.The impugned order was set aside, and the case was remanded to the original authority for further verification.