2010 (2) TMI 202 - AT - Service Tax

Appellate Tribunal allows full credit of service tax on specified categories despite mixed services

The Appellate Tribunal CESTAT, Chennai allowed the appeal of the assessee, permitting full credit of service tax paid on taxable services under specified ... CENVAT credit - entitlement to input service credit - Rule 6(5) of CENVAT Credit Rules, 2004 - Rule 6(3)(c) of CENVAT Credit Rules, 2004 - non-obstante clause - exempted servicesCENVAT credit - Rule 6(5) of CENVAT Credit Rules, 2004 - Rule 6(3)(c) of CENVAT Credit Rules, 2004 - non-obstante clause - exempted services - Whether the assessee is entitled to claim the entire CENVAT credit of service tax paid on specified taxable services despite the apportionment limits in Rule 6(3)(c). - HELD THAT: - The Tribunal found that the services on which service tax was paid fall within the 17 categories specified in Rule 6(5) of the CENVAT Credit Rules, 2004 and that such services were not used exclusively in or in relation to providing exempted services. Rule 6(5) operates as a non-obstante clause and therefore overrides and widens the restriction contained in Rule 6(3)(c). The Revenue did not contend that the taxed services were outside the 17 specified categories. Applying the overriding effect of Rule 6(5), the Tribunal concluded that the apportionment ceilings in Rule 6(3)(c) could not be invoked to deny or limit the assessee's credit and that the assessee is entitled to the full credit of service tax paid on the specified taxable services.Impugned order set aside; appeal allowed and the assessee entitled to entire CENVAT credit of service tax paid on the specified services with consequential relief.Final Conclusion: The Tribunal allowed the appeal, holding that Rule 6(5) - being a non-obstante provision covering the 17 specified services not used exclusively for exempted services - permits the assessee to claim the full CENVAT credit, thereby setting aside the limitation imposed under Rule 6(3)(c). The Appellate Tribunal CESTAT, Chennai ruled that the assessee providing taxable services like 'Mandap Keeper' and 'Health club and Fitness centre', along with non-taxable service of leasing out immovable property, can avail full credit of service tax paid on taxable services specified in 17 categories under Rule 6(5) of CENVAT Credit Rules, 2004. The tribunal set aside the previous order and allowed the appeal, granting consequential relief to the appellants. (2010 (2) TMI 202 - CESTAT, CHENNAI)