TaxTMI 
TaxTMI 
2023 (12) TMI 1478
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....urisdiction of State of J&K whereas though the output services of "Erection, Commissioning and Installation" have been admittedly provided to M/s. NHPC in the State of J&K, the incidence of availment and utilization of the credit of disputed Service Tax paid on input services, has occurred at the premises of the assessee situated at Maneja, Vadodara, in the State of Gujarat but not in the State of J&K? (ii) Whether the Hon'ble Tribunal was correct in drawing the conclusion to the effect that since the services provided in J&K are clearly excluded from the provisions of Chapter V of the Finance Act, 1994, also does not fall under the definition of "exempted services" as per Rule 2(e) of Cenvat Credit Rules, 2004? (iii) Whether a manufacturer of goods or provider of output services opting not to maintain separate records, in terms of Rule 6(2) of CCR, 2004, is required to exercise option for payment of amount in terms of Rule 6(3)(ii) of the CCR, 2004, and intimate the same in writing to the jurisdictional Superintendent of Central Excise; as prescribed under Rule 6(3A)(a) of CCR, 2004, at the beginning of the Financial Year or whether this can be exercised at a....
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...., a show cause notice was issued calling upon the respondent to show cause as to why the respondent should not be charged with service tax @ 5% or 6%, as the case may be. 2.4 During the course of audit, it was also found that the respondent was liable to reverse amount in terms of Rule 6(3) of the Rules. However, they failed to do so and accordingly, the show cause notice was issued. 2.5 The respondent, in response to the show cause notice, contended that as the Chapter-V of the Finance Act, 1994 is not applicable to the State of Jammu and Kashmir, the respondent was not liable to pay the service tax as no output service was provided in the taxable territory. It was also contended by the respondent that the service tax is a 'destination based consumption tax' and, therefore, it is to be levied on the basis of the place where the services are consumed as such and as the State of Jammu and Kashmir not being covered under Chapter V of the Finance Act, 1994, no service tax was attracted to be paid by the respondent. Reliance was also placed on the Circular No. 56/5/2003 dated 25.4.2003, wherein it is clarified that the service tax is a destination based consumption tax and the pr....
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....rate accounts, the appellant is liable to pay amount @5% / 6% under the provisions of Cenvat Credit Rules 2004. 4.2 We find that as per the definition of input service given in Rule 2(l), Input service means any service used by a provider of taxable service for providing an output service. Undisputedly, the services provided in the State of Jammu & Kashmir are not taxable services. Further the Sub-clause (2) of Rule 6 of Cenvat Credit Rules, 2004 reads as under:- "Where a manufacturer or provider of output service avails CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output services, then the manufacturer or provider of output service shall maintain separate accounts for - (a) ....... (b) ....... The above provision speaks about the situation when the service provider is rendering output services which are chargeable to tax as well as exempted services. The services rendered in Jammu & Kashmir are not chargeable to service tax and therefore, are not taxable services. But this does not make them exempted services also. A service becomes an exempted service when by notificatio....
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....ized the Cenvat credit availed on the input services which are utilized to provide the services in the State of Jammu and Kashmir and, therefore, to that extent, the respondent was required to maintain the separate accounts to bifurcate the Cenvat credit availed on the input services which were utilized for providing services in the State of Jammu and Kashmir and as such, both the Commissioner of Central Excise and the Tribunal have committed an error while holding that the respondent was not liable to the reversal of the Cenvat Credit vis-a-vis the input services utilized for the services rendered by the respondent in the State of Jammu and Kashmir. It was submitted that it is true that the Chapter-V of the Finance Act, 1994 is not applicable to the State of Jammu and Kashmir. But, at the same time, when the respondent was availing the Cenvat Credit on the input services from the other parts of the country, then the Cenvat Credit which was availed on the input services utilized for providing service in the State of Jammu and Kashmir, cannot be permitted to be availed by the respondent. 3.1 It was further submitted that the provision of Rule 2(e) of the Rules prevailing at the r....