TaxTMI 
TaxTMI 
2025 (12) TMI 557
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....[the Commissioner] by which the demand towards exempted services has been confirmed with interest and penalty by invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act, 1994 [the Finance Act] and a direction has been given to recover it from the appellant under section 73(1) of the Finance Act read with rule 6(3)(i) and rule 14 of the CENVAT Credit Rules, 2004 [the 2004 Credit Rules]. 2. The appellant is engaged in various services such as management or business consultant service, consulting engineer service, manpower recruitment/supply agency service, business auxiliary service, renting of immovable property service, legal consultancy service and sponsorship services and was regist....
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.... the negative list under section 66D(e) of the Finance Act warranting reversal of CENVAT credit thereon in terms of rule 6(3)(i) of the 2004 Credit Rules. 7. The Commissioner confirmed the entire demand of recovery of CENVAT credit along with interest and imposed penalties upon the appellant observing that the redemption of Mutual Funds is an exempted service as it falls under the ambit of "Trading of Goods" as provided under section 66D(e) of the Finance Act. The findings given in the impugned order are as follows: (i) The frequency and amount involved in the purchase of units in Mutual Funds for investment was huge, which indicates that the appellant was involved in trading with an intention to earn profit. Thus, the activity ....
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....the entity providing Mutual Funds units, and the amount paid for purchasing the Mutual Funds/ the amount received on redemption, is the consideration; and (v) The appellant is not liable to reverse proportionate credit under rule 6(3)(ii) of the 2004 Credit Rules read with rule 6(3A) of the 2004 Credit Rules as the appellant, by not furnishing any intimation to the department, has not complied with rule 6(3A) of the 2004 Credit Rules. 8. It is against this order of the Commissioner that the appellant has filed this appeal. 9. Shri S.C. Vaidyanathan, learned counsel for the appellant assisted by Shri Shivam Batra submitted that the issue involved of non-reversal of proportionate CENVAT credit availed on common input services u....
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....service in terms of section 66D(e) of the Finance Act. 13. The submission advanced by learned counsel for the appellant is that subscription and redemption of liquid mutual fund units cannot be termed as 'trading of goods' and hence, do not qualify as 'exempted services' for the reason that the term 'trading' involves buying and selling of goods with transfer of title in property from one person to another. However, transfer of units does not take place in mutual funds because the units cease to exist i.e., they get cancelled or relinquished upon redemption. The present activity would, therefore, not be akin to the sale and purchase of shares in a stock market. Securities, on the other hand, are traded and the ownership of such sec....
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.... There should be a fixed price known in advance while selling or buying the said good etc. If we test the activities undertaken by the appellant, against the above criteria the activity of subscription and redemption of the units of the mutual fund is not an activity of sale and purchase of the securities. When the units of mutual fund are redeemed, the units cease to exist i.e., gets cancelled or relinquished, It does not get transferred to the third party. Thus investment activities undertaken by the appellants is totally different from 'trading in securities'." (emphasis supplied) 13. After referring to the decisions of the Tribunal in Ace Creative Learning Pvt. Ltd. vs. Commissioner of Central Tax, Bengaluru South G....