TaxTMI 
TaxTMI 
2015 (10) TMI 979
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....ing repair/maintenance of vehicles at their authorized service station. Besides they also arrange finance and insurance of vehicles through Banks and Insurance Companies for which they receive commission. A show cause notice dated 31.12.2010 was issued alleging that appellant had wrongly availed Cenvat Credit of service tax paid on mobile phone bills for the period 2005-2006 (Rs.16,558), 2006-2007 (Rs.37,732), 2007-08 (Rs.33,665) and 2008-2009 (Rs.16,086). The appellants had adjusted an amount of Rs. 1,14,041/- payable as service tax fully from the Cenvat credit. The department was of the view that as the main activity of the appellant is purchase and sale of vehicles, i.e. trading activity, the credit is not available as the appellant did ....
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....e tax liability for the above output services. It is submitted that sub rule (2) of Rule (6) provides for maintaining separate accounts only when input services are commonly used for both exempted services and dutiable services. Trading has been categorized as exempted service only w.e.f. 1.4.2011. Prior to that, i.e., during the disputed period trading was not an exempted service. Therefore there was no obligation on the part of the appellant to maintain separate accounts. That therefore the appellant is entitled to avail the full credit. 5. Heard both sides. Undeniably the input services (mobile phones) are used as common input for trading activity as well as other output services. As per sub rule (2) of Rule 6 of the CCR, 2004, the asse....
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.... at the same time there is no provision to cover situations where an assessee is providing a taxable service and is undertaking another activity which is neither a service nor manufacture. In such a situation the only correct legal position appears to be that it is for the appellant to choose and segregate the quantum of input service attributable to trading activity and exclude the same from the records maintained for availment of credit. Naturally this cannot be done in advance since it may not be possible to forecast what would be the quantum of trading activity and other activity which is liable to service tax. The only obvious solution which would be legally correct appears to be to ensure that once in a quarter or once in a six months....
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....de only after giving an opportunity to the appellants." 6. From the above, the view taken by the department that the appellant is not entitled to credit, because the appellant failed to maintain separate accounts is not correct. So also the whole of the credit is not admissible as credit attributable to trading activity is not admissible. On merit I find that appellant is eligible for credit of service tax paid on input services attributable to output services which needs verification and quantification. 7. The next issue to be considered is limitation. The audit was conducted on 27.10.2008 and the SCN is issued on 31.12.2010 raising demand for the period 2005-06 to 2008-09. The learned counsel for the appellants vehemently argued that th....