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2018 (8) TMI 548
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....f Cenvat Credit Rules, 2004, wherein "exempted services' is defined as under :- "exempted services' means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under Section 66 of the Finance Act and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Explanation - For the removal of doubts, it is hereby clarified that "exempted services' includes trading ;' The above explanation was inserted vide Notification No. 3/2011-CE (NT) dated 01/03/2011. Since the explanation is clarificatory in nature, it appears to have a retrospective effect. 2. The appellant has not denied the fact that they have been availing the Cenvat credit of the service tax paid on the common input services for "trading goods', however, it has been contended that firstly; the trading of goods has come into the exempted category only since 01/03/2011 and therefore the explanation adding "trading' in the exempted service category cannot be made retrospectively applicable and secondly; they have reversed ba....
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...., advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal; (Emphasis supplied). We observe the definition of "input service' has two parts. The first part provides for use by a provider of a taxable service for providing output service. The second part provides for use by a manufacturer in or in relation to the manufacture of final products. Further, the said definition relating to manufacture not only relates to the services which are used in the manufacturing operations but also includes services used in relation to setting up, modernization, renovation or repairs of a factory, advertisement or sales promotion, market research, storage up to the place of removal, etc. The definition further includes activities relating to business such as accounting, auditing, financing, recruitment and quality control, coaching and training, comput....
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....the Hon'ble High Court to become input Service'. On the other hand, Hon'ble Member (Judicial) took note of the decision in the case of Ultratech Cement Ltd. relevant portion of which reads as follows : "29. The expression "activities in relation to business' in the definition of "input service' postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with the business of the manufacture of final product, the service would not qualify to be a input service under Rule 2(l) of the 2004 Rules.' In view of the above judgment, he was of the opinion that "a manufacturer claiming the benefit of Cenvat credit on any service under Rule 2(l) on the premise that the service is covered by the above expression should establish an integral connection between the activity/service and the business of manufacturing the final product.' 31.1 I find that the decision in the case of Coca Cola analyses the definition of "input services' in 5 limbs and holds that each limb of the definition of input service can be considered as providing an independent benefit or concession or exemption. One of the limbs considered related ....
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.... services of which credit has been taken and are matter of dispute in the present case. The main common services on which the credit has been taken are advertisement, event management service, business auxiliary services, business support services. These services are related to sales promotion and are included in the definition before the words "activities relating to business such as...........' In respect of these services, there can be no doubt that these have to be linked with manufactured product (and not to the traded goods). We also note that all services used in business are not included in the definition of input service. This part of the definition reads- activities relating to business such as accounting, auditing, financing, recruitment and ....' Thus the services used in activities such as accounting, auditing, financing, recruitment, etc., are only to be allowed. The services under dispute are mainly advertisement, event management, business auxiliary, business support services. None of these services are relating to activities illustrated or enumerated in the definition. On this ground also we do not find any merit in the contention of the appellant assessee that....
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....'ble Gujarat High Court reported in 2016 (45) S.T.R. J218 (Guj.). Therefore, the retrospective applicability of the explanation, which has been inserted under Rule 2 (e) of the Cenvat Credit Rules, 2004 becomes applicable retrospectively as same is being considered as an explanation to the already existing provisions. The relevant extract of the above said judgment is reproduced here-in-below :- "20. But, the Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra) was unable to concur with the contrary view taken by the Hon'ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Ambika Overseas (supra). The Hon'ble Gujarat High Court held that this issue is concerned, the question is answered in favour of the Revenue and against the assessee. In this background, legislature explained the meaning of the sales promotion by inserting Explanation in Rule 2(l) of Rules, 2004 and declared that sales promotion includes services by way of sale of dutiable goods on commission basis. In other way, Explanation to Rule 2(l) of Rules says in clear terms that there is no bar on availment of the Cenvat credit on sales promotion service by way ....
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....hat such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India & Ors. v. Indian Tobacco Assn, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in Vijay v. State of Maharashtra. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are (sic not) confronted with any such situation here.' 7. Now coming to the other issue which need our consideration, is whether the appellant need to reverse back the Cenvat credit @ 6% of the value of traded goods or the proportionate of Cenvat credit as availed by them towards trading of the goods. 8. We find that this Tribunal in its various decisions has held that it has never been intention of the legislature to recover from the assessee what is actually attributed....
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....the arguments, we found that as regards the judgments on the issue of availment of Cenvat credit on the input or input services used in dutiable and exempted goods, the provision involved in the present case i.e. Rule 6(3) (i) (ii) (3A) has not been considered in the relied upon judgments, therefore the same are not applicable. As regard the other judgments, all these judgments having different facts and dealing with other provisions such as SSI exemption, exemption notification, etc., which are not identical to the fact of the present case, Moreover, in the present case the substantive provisions under Rule 6(3)(ii) and sub rule (3A) i.e. payment of equivalent to the Cenvat credit, which the appellant have complied with and if at all there is delay, the required interest has also been paid, therefore in the present case, there is no case of noncompliance of procedure and condition. Therefore the judgments cited by the ld. A.R. are not applicable'. 9. In this case, it has been claimed by the appellant that an amount of Rs. 1,02,345/- attributable to the trading of goods (exempted service) has already been reversed by the appellant. We find that though there is a mention of this as....