TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 48
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of input service distributors invoice on the ground that the input service distributor as well as the appellant have not maintained proper grounds of services availed so as to show the particulars of services availed by or on behalf of the appellants Tarapur Unit while distributing the above service tax meant for credit under cenvat credit amount. He further contended that the entire credit was distributed as transfer to Tarapur Unit of the total service tax paid by the head office of the appellant (input service distributor). The input service distributor had allocated amount of service to the appellant Tarapur Unit without considering these services were used in or in relation to manufacture at Tarapur Unit or otherwise. As such these invoices of service tax amount appeared to be not related to Tarapur Unit and its activity of manufacturing excisable products. Being aggrieved by the order-in-original appellant filed the present appeals. 2. Shri J.C. Patel, Ld. Counsel with Ms. Shamita J. Patel Ld. Advocate appearing on behalf of the appellants submits that during the relevant period there was no provision that the credit should be distributed proportionately as per the use of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r providing of exempted services shall not be distributed. From the plain reading of the Rule prevailing prior to 1.4.2012 it can be seen that for distributing the input service credit only two conditions were required. The credit distributed should not exceed the amount of service tax paid and credit of service should not be exclusively used for exempted goods or exempted service. From the facts of the case it is found that both the conditions stand complied with and there is no dispute on these conditions. When the amendment relies that the credit of input service can be distributed only to the extent the service used in respective units the Rule 7 was amended and according to the amended rule as reproduced above. Only proportionate credit to the extent of service used in a particular unit is allowed to be distributed to that unit as per reading of the Rule 7 before and after amendment. It is clear that there was no restriction for the quantum of credit to be distributed prior to 1.4.2012 therefore entire demand which is solely based on the premise that the service in respect of the credit distributed was not used in appellant s factory gets demolished. This issue has been cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....redit. The first restriction is that the credit should not exceed the amount of Service Tax paid. The second restriction is that the credit should not be attributable to services used in manufacture of exempted goods or providing of exempted services. There are no other restrictions under the rules. The restrictions sought to be applied by the Department in this case in limiting the distribution of the Service Tax credit made in respect of the Malur Unit on the ground that the services were used in respect of the Cuttack Unit finds no mention in the relevant rules. As such, restricting the distribution of Service Tax credit in a manner as has been done by the impugned order of the lower appellate authority (original authority had approved of such distribution) cannot be upheld. In case the Department wants to place such restriction as is sought to be placed in the case, the rule is required to be amended. The above decision of the Tribunal was maintained by the Hon'ble Kartanaka High Court reported at 2012 (26) STR 100 (Kar.) wherein the Hon'ble High Court has passed the following order : 4. The assessee had availed the services tax credit based on the invoices issued by the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aintains record to verify the credit distributed. 8. The term an office used in Rule 2(m) of Cenvat Credit Rules, 2004 is to be read in plurality in the context in which that is used and any narrow meaning given to the term an office would defeat the spirit of the provisions in Section 13(2) of General Clauses Act, 1897. 9. We may further add that the assessee is not merely entitled to take credit of the unit where the products is manufactured, but it may also get credit of input tax paid by its head office to arrest cascading effect which is the mandate of Rule 7 of Cenvat Credit Rules, 2004. That Rule governs the procedure/manner of distribution of credit by a input service distributor prescribing two conditions. Those are as follows :- (a) Credit distributed under the invoice of ISD not exceeding the amount of Service Tax paid; and (b) Credit of service exclusively used for exempted goods or exempt service is not distributed. There is no finding by the adjudicating authority of any violation of the above conditions. Therefore, there cannot be denial of Cenvat credit distributed to the appellant for its consumption. In the case of national Industries Ltd. (supra) th....