TaxTMI 
TaxTMI 
2022 (8) TMI 877
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....demand amount of Rs. 5,98,82,040/- (Rs. Five Crore Ninety Eight Lakhs Eighty Two Thousand & Forty Only) against the Party under the provisions of sub-rule (3A) to Rule 6 and Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 73(1) of the Finance Act, 1994; (iii). I demand interest at the appropriate rate on the aforesaid amounts, as mentioned against S.No. (i) & (ii) above, under the provisions of Section 75 of the Finance Act, 1994 and; (iv). I impose a penalty of Rs. 6,27,38,707/- (Rs. Six Crores Twenty Seven Lakhs Thirty Eight Thousand Seven Hundred Seven Only) [Rs. 28,56,667/- + Rs. 5,98,82,040/-], on the Party under the provisions of Section 78 of the Finance Act, 1994. 3. The first demand of Rs 28,56,667/- is under rule 6(3)(c) of the CENVAT Credit Rules, 2004 [the Credit Rules]. The second demand of Rs. 5,98,82,040/- is under rule 6(3)(1) of the Credit Rules. The first demand is for the period from April 2006 to March 2008 and is the amount paid in excess of 20% of service tax payable from the credit account, on account of credit of input services used in manufacture of dutiable goods/taxable services as well as in trading activity (exempted service) ....
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.... the period from April 2006 to March 2008 has been computed as under: Sl. No. Period Total Service Tax Liability (in Rs) Service Tax paid through Cenvat Credit (Rs.) Service Tax liability @20% to be paid through Cenvat Credit in view of provisions of Rule 6(3)(c) Excess Cenvat Credit utilised beyond the permissible limit of 20% of overall Service Tax liability (in Rs) 1. April, 06 to Sept, 06 24,45,273 24,45,273 4,89,055 19,56,218 2. Sept, 06 to March, 07 3,84,564 3,84,564 76,913 3,07,651 3. April, 07 to Sept, 07 1,17,782 1,17,782 23,556 94,226 4. Oct, 07 to March, 08 6,23,216 6,23,216 1,24,644 4,98,572 TOTAL 35,70,835 35,70,835 35,70,835 35,70,835 9. The demand for the period from April 2008 to March 2011 has been computed as under: Sl. No. Financial Year Value of the exempted services (in Rs.) % of the value of exempted services required to be paid under Rule 6(3)(i) of Credit Rules Amount required to be paid under Rule 6(3)(i) of Credit Rules 1. 2008-2009 24,54,33,000 8% 1,96,34,640/- 2. 2009-2010 25,75,95,000 8% 2,06,07,600/- 3. 2010-2011 32,73,30,000 6% 1,96,39,800/- Total 5,98,82,040/- 10. The ....
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....h respect to utilization; (iv) For not exercising the option under rule 6 of Credit Rules by the appellant, the option of payment of 6/8% of trading of goods (exempted service) cannot be thrust upon the appellant. Hence the demand of Rs.5,98,82,040/- is unsustainable. In support of this contention reliance has been placed on the judgment of the Telangana High Court in Tiara Advertising vs. Union of India [2019 (30) GSTL 474 (Telangana)] and the decision of the Tribunal in Agrawal Metal Works Pvt. Ltd. vs. CGST [2022 (7) TMI 924]; (v) The extended period of limitation could not have been invoked in the facts and circumstances of the case; and (vi) The appellant was in any view of matter, only required to pay Rs. 8,40,835/- under rule 6(3A) for period 2008-2011 and payment of such amount would tantamount to full compliance of rule 6(3). 12. Shri B. K. Jain learned aurhorised representative appearing for the department however, supported that the impugned order and made the following submissions: (i) Trading activity is not a taxable activity and so CENVAT credit is not allowable on the common input services attributable to trading activity under rule 6 of Credit Rules before....
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....xempted service'. The definition of 'exempted service' has undergone amendments from time to time and the definition as it stood from 2006 to 01.04.2011 and from 01.04.2011 onwards is reproduced below: 2006 to 1.4.2011 "(e) "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" 1.4.2011 onwards "(e) "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." 18. It is clear from the definition of 'exempted services' w.e.f. 01.04.2011 that 'exempted services' included trading. The issue that arises for consideration is whether the Explanation to rule 2(e) is prospective in nature as submitted by the appellant....
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....rtin Lottery Agencies Ltd. (supra). Since, the law is well settled by the Hon'ble Apex Court in context with retrospective or prospective operation of the statute, the principles enunciated in the case of Martin Lottery Agencies Ltd. (supra) will be considered as the guiding factor for deciding the issue involved in the present case. 5.6 In view of the above discussions, we do not find any infirmity in the findings recorded in the impugned order, holding that amendment to Rule 2(e) by Notification No. 3/2011-C.E.(N.T.) dated 01.03.2011 will have the prospective effect and cannot be applied retrospectively. Thus, we do not find any merits in the appeal filed by the appellant." (emphasis supplied) 21. The same view was expressed by the Tribunal in Lenovo (India) and the relevant paragraph is reproduced below: "7. We find that for the period 01.04.2011, the issue stands decided in the case of Mercedes Benz India Pvt. Ltd. (supra) wherein it was held that trading is not an exempted service prior to 01.04.2011; provisions of Rule 6 requiring reversal of 6% of trading turnover is not applicable." 22. It is, therefore, clear that trading was not an 'exempted service' prior to 01.0....