2015 (7) TMI 1221

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....ss auxiliary service and for that purpose, is registered under the service tax statute. The appellant is also a dealer of Mahindra vehicles. The appellant avails cenvat credit of service tax paid on various services used for both providing of output services as well as for selling of vehicles. Taking of cenvat credit of service tax paid on both category of services were objected to by the Department and the service tax and penalty amount were confirmed by the authorities below. 3. Shri Jitendra Singh, the ld. Consultant appearing for the appellant submits that the appellant availed the cenvat credit under the bonafide belief that selling of vehicles is not an exempted service and as such, the embargo created in Rule 6 of the Cenvat Credit ....

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....sides and perused the records. 6. Rule 3 ibid is the enabling provision, which entitles the service provider to take cenvat credit of service tax paid on any input service received by the provider of output services. Since the appellant is providing the taxable service as well as selling vehicles, had entertained the view that selling vehicles since is not an exempted service, the appellant is entitled for cenvat credit in terms of rule 3 of the said rules. 7. I find that with regard to taking of cenvat credit on the trading activity by considering the same as service has been dealt with by this Tribunal in the case of Orion Appliances Ltd. (supra). The relevant portion of the decision is extracted below:- 8. Then the question arises as ....

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....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, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of service tax of output service. This proposition is not against the law in view of the fact that there are several decisions of various High Courts and also of the Tribunal wherein a view has been taken that subsequent reversal of credit amounts to non-availment of credit. 8. In view of the said decision, since the appellant had reversed the cenvat credit attributable to the trading activity i.e. selling of vehicles alongwi....