TaxTMI 
TaxTMI 
2019 (11) TMI 677
X X X X Extracts X X X X
X X X X Extracts X X X X
....ning the value of the service portion and also the value of the material/consumable portion used in providing their services; that they paid Service Tax on the value of services rendered and also paid VAT on the consumables used/sold, as required under the respective State Act. 2.2 In view of the above facts, the dispute that has led to the present appeal is - " whether the appellant was required to reverse the proportionate common input service tax credit availed by them in respect of Telephone and Renting of Immovable Property Service as per Rule 6 (3) of the CENVAT Credit Rules, 2004 since the consumables sold by the appellant while rendering service was alleged to be a trading activity which is an exempted service from April 2011? " Show Cause Notice came to be issued, to which the appellant filed its effective reply which culminated in the confirmation of demand vide Order-in-Original No. 05/2018 dated 26.04.2018. Thereupon, the same was also upheld by the Ld. First Appellate Authority vide impugned Order-in-Appeal dated 06.03.2019. 3. When the matter was taken up for hearing, Shri. N. Viswanathan, Ld. Advocate, appeared for the assessee-appellant and Ms. Sridevi Taritla, Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....). 7. In reply, Ld. Advocate submitted that the period involved is from 2012-13 to 2015-16; the Show Cause Notice issued in 2017 (dated 27.07.2017) is clearly beyond the normal period, which in the absence of suppression, fraud, etc., cannot be sustained. He further submitted that the appellant did not take any credit of the input duty on such consumables used/sold by them and therefore, for the above reasons, the allegation as to treating the appellant's service as trading, which is exempt, requiring the appellant to reverse the common input service tax credit availed is not correct and proper and hence, the same is liable to be set aside. 8. I have heard the rival contentions, perused the documents placed on record and also gone through the decisions/orders referred to during the course of arguments. 9.1 The C.B.E.C. Circular No. 699/15/2003-CX (supra), relied upon by the appellant, has clarified the issue regarding Service Tax on Authorized Service Station during the course of providing service, wherein such ASS replaces engine oil, gear oil, coolants, etc., as per the request of the customer, in the following manner : "Subject: Clarification regarding service tax on autho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roviding output service and the quantity of input meant for use in the manufacture of exempted goods or services and take Cenvat credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable." 16. Therefore, the issue is whether the assessee could claim the credit on input which were not services. Input credits can be used for payment of service on output service provided such services are used to provide output services. Undoubtedly, there cannot be an exact correlation between one kind of input and corresponding. That is the reason the Rules cover situations where assessees provide both exempted and taxable services. Wherever someone undertakes activities that cannot be called a service or which is not "manufacture", that activity goes out of the purview of both Central Excise Act as well as Finance Act, 1994. In such cases, an assessee would be ineligible for claiming input-service tax credit on an output which is neither a service nor excisable goods. There is no provision to cover situations where an assessee is providing a taxable service and is undertaking....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he method of proportionate turnover based attribution to the assessee's liability: "I find that it was clear in 2008 itself that no Cenvat Credit is available for services used for trading as decided by Hon'ble CESTAT in the Metro shoes case. The noticee has availed the Cenvat Credit used for exempted services namely trading without reversing the proportionate credit. They have never informed the department about taking the wrong credit. This would have been undetected if the facts were not noticed during audit. M/s. Lally Automobiles Private Ltd. have failed to inform the department that they are not maintaining the separate records for input services used for taxable and exempted services. It is already noted that the law requires an assessee to maintain separate records of Cenvat credit received on taxable or non-taxable services. In case the separate records are not maintained, the Cenvat credit is to be reversed as per Rule 6(3) of the Cenvat Credit Rules, 2004;. I find that : M/s. Lally Automobiles Private Ltd. have not reversed the same by suppression of material facts. The excess credit availed utilized by them is liable to be recovered in terms of Rule 14 of Cenvat Credi....