AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 239
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..... Further, the Appellant was availing credit of service tax paid on input services and was utilizing the same for payment of service tax. Audit of the Appellant's records was conducted by the Departmental Officers for the period 2007-08 to 2011-12 and from 31.10.2012 to 03.11.2012, and it was observed by the audit team that the Appellant have availed Cenvat credit of service tax paid on input services, which are also utilized for trading (sale of cars) which is not a taxable output service provided by the Appellant and that Appellant had taken 100% Cenvat credit on common input services, such as service tax paid on telephone bills, security services, etc. during the relevant period. 3. In furtherance to the above, by invoking the extended period of limitation, the Appellant was issued Show Cause Notice SCN dated 22.04.2013 wherein it was alleged that Appellant can avail Cenvat credit only on those input services which are utilized in providing taxable output services and that the Cenvat credit amount, to the extent it was utilized in trading, appears to be not admissible. 4. The SCN do not specify either any input service or any amount of cenvat credit which was allegedly com....
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....input services used exclusively in providing the taxable output service is to be excluded. It is also the case of the Appellant that the value of the opening and closing stock has been incorrectly taken in the SCN, and if the correct figures are used, then only Rs. 1,87,604/- is required to be reversed. He also argued that the extended period of limitation is not applicable. 8. The learned Departmental Representative justified the impugned order and submitted that the appeal filed by the appellant be dismissed being devoid of merits. 9. Heard both sides and perused the appeal records. 10. We find that the issue in the present appeal is no more res integra and was considered by the Hon'ble Telangana High Court in the case of Tiara Advertising V/s Union of India reported in 2019 (30) GSTL 474 (Telangana). The relevant paras of the aforesaid judgment are reproduced below:- "7. Rule 6 of the Cenvat Credit Rules, 2004 deals with the obligations of a provider of taxable and exempted services. Rule 6(1) states that Cenvat Credit shall not be allowed on inputs/input services exclusively used for providing exempted services. Rule 6(2) provides that if inputs or input services are used ....
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....iginal however reflects that the second respondent did not even advert to the case law cited before him. 10. Another issue that was raised by the second respondent in the show cause notice was with regard to certain debit notes produced by the petitioner not being valid invoices for the purpose of availing Cenvat Credit. In response to this, the petitioner contended that debit notes were valid documents for availing such credit, by relying upon Rule 9(2) of the Cenvat Credit Rules, 2004. It also pointed out that this issue had fallen for consideration before the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal in Mahanagar Gas Ltd. v. CCE - 2015-TIOL-1069, wherein it was held that a debit note would be on par with the documents mentioned in Rule 9(1) of the Cenvat Credit Rules, 2004. Reliance was also placed on CCE, Indore v. Grasim Industries Ltd. - 2011 (24) S.T.R. 691, a decision of the Delhi Bench of the Tribunal, which also held to this effect. Various other decisions were also cited in this regard. However, the second respondent did not choose to advert to any of these decisions while holding against the petitioner on this aspect also. 11. In fact, n....
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....under a provision which was not even available to him, as it was an enabling provision put in place for the benefit of the assessee, and arrived at a wholly unreasonable, if not absurd, result. That apart, the second respondent did not even choose to deal with the binding case law cited before him while dealing with the issues arising for consideration. This arrogant and arbitrary approach adopted by the second respondent cannot be countenanced. It would therefore not be necessary for the petitioner to go through the motions of a statutory appeal to challenge the same. The contention of the respondents as to the maintainability of the writ petition is therefore rejected. 14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of t....
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....ules, 2004, it was open to the Adjudicating Authority to reject the assessee's claim as regards the disputed cenvat credit and it could not mechanically invoke 5% Rule on the assessee. 13. We also find that the Tribunal in the case of M/s Ingersoll-Rand Technologies And Services Pvt. Ltd. V/s Commissioner, Central Excise, Ghaziabad reported [2022 (8) TMI 877-CESTAT Allahabad] being Service Tax Appeal No.58874 of 2013 vide Final Order No.70137/2022 dated 18.08.2022, have held that for not exercising the option under Rule 6 of the Credit Rules, the option of payment of 5/6% of trading of goods ('exempted service') cannot be thrust upon the appellant. The relevant paragraphs are reproduced as under:- 15. The stand of the department is that for the relevant period from April 2006 to March 2011, trading activities undertaken by the appellant qualified as "exempted service" within the meaning of rule 2(e) of the Credit Rules and that the Explanation added to the definition of "exempted service" w.e.f. 01.04.2011 only clarified that the trading activities have always been treated as "exempted service" for the purpose of the Credit Rules. Thus, the appellant which was providing both tax....
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...., then it would be presumed to have only prospective effect, unless a contrary intention is expressed by the legislature. The same view was expressed by the Supreme Court in Martin Lottery. The Supreme Court, in effect, held that the use of the phrases, "it is hereby declared" or "removal of doubts", in itself will not enable a presumption to be drawn that the Explanation is retrospective. 20. The Tribunal in Trent Hypermarket, while dealing with the definition of "exempted service" under rule 2(e) of the Credit Rules, held that trading cannot be treated as an "exempted service" for the period prior to 01.04.2011 and the Explanation added on 01.04.2011 was prospective and not retrospective. The relevant portion of the decision is reproduced below : "5.5 It is evident from the amending provisions of Cenvat statute w.e.f. 01.03.2011 that a substantive law was enacted to consider the activities of trading as an exempted service. Now the issue remains for resolution, as to whether, such amendment in the statutory provisions is to be construed as retrospective in effect or prospective, in order to be given effect to. In this context, the law is amply clear that if a substantive law i....