TaxTMI 
TaxTMI 
2026 (3) TMI 1150
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.... other unregistered units situated at Bhandu, Bangalore, Ahmedabad, Deonar and Mumbai for which the appellant had not taken service tax registration. Scrutiny of records / documents relating to Cenvat Credit revealed that the appellant had availed Cenvat Credit in respect of input services at unregistered premises viz. Renting of Immovable Property of premises at Ahmedabad and Security Services at Bangalore and Ahmedabad. It was further noticed that though the appellant was engaged in providing taxable services from those premises but they failed to take service tax registration for those premises. Further, the appellant had utilized the service tax credit in respect of the above mentioned services availed at unregistered premises for payment of service tax from the centralized registered premises. 1.2 The scrutiny of annual reports of the appellant for the financial year 2012- 13 revealed that apart from providing taxable services they were also engaged in the trading activity of Ortho items as reflected in their balance sheet. The trading activity has been considered as exempted service as defined under Rule 2 (e) of Cenvat Credit Rules 2004 and also included in the Negative L....
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.... and use of Cenvat Credit is governed by Cenvat Credit Rules, 2004 (CCR) alone. Merely not adding the Vapi premises in the registration has been made a ground for disallowance of Cenvat Credit. Therefore, the impugned order is liable to be set aside. 2. The learned counsel for the appellant also submitted that the learned Commissioner failed to understand that they have not availed Cenvat Credit on any common input services. Cenvat Credit on Renting of Immovable Property Services is availed and used for provision of Renting of Immovable Property, the leased premises. Security deployed as Sarkhej, Ahmedabad is used for clearing and forwarding of electrical goods. Therefore, it is evident that no other activity can be carried out from the said premises other than the taxable service of clearing and forwarding. They also carried out taxable service of clearing and forwarding of healthcare goods from Bhanergatta Road, Bangalore and storage of such goods is an integral part of the clearing and forwarding service. The appellant engaged Security Service when the goods were stored. The learned Commissioner erred in treating the input service of Renting of Immovable Property and Security....
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....Rule 6 (3D) of CCR. Further 'cost of goods sold' under the said Explanation is provided as generally accepted principle and does not include any expenditure incurred towards the purchase. The value of exempt service in the Show Cause Notice was considered as 10% of goods sold. The value of goods sold was treated as 10% of purchases instead of cost of goods sold. The learned Commissioner failed to appreciate that cost of goods sold in relation to trading activities is purchases plus difference of opening stock less closing stock. The learned Counsel for the appellants further submitted that the purchases treated as cost of goods sold is to be considered for trading in securities and not goods as mentioned in the said explanation-I to Rule 6 (3D) and therefore, the learned Commissioner has erred in not taking cognizance of error in computation of exempt service. The learned Commissioner assumed that the appellants have included the cost of purchases without providing any evidence to the same and therefore non-consideration of opening and closing stock despite it being part of value of exempt service as defined under the explanation to Rule 6 of CCR was not proper. The Order-in- Appea....
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.... lapse and none of the Cenvat Credit Rules provide registration to be sought for availment of Cenvat Credit. The appellants relied on decision of Mporter India Wireless Solution Pvt Ltd vs. CST Bangalore 2012 (27) STR 134 (KAR). The learned Counsel for the appellant prayed that the impugned order passed by the learned Commissioner be set aside and the appeal may be allowed. 3. The learned Authorised Representative for the department submitted that there is no dispute that the appellant is also engaged in the trading activity of Ortho items which is exempted service being carried out from their Vapi premises. It is also not disputed that appellant have their another units at Bhaduk, Bangalore, Ahmedabad, Devnar and Mumbai which are not registered with the department and not included in the Centralised Registration of the appellant. The appellant's contention cannot be accepted that they have not availed any credit of input services in respect of their trading activity (exempted services) hence, the provisions of Rule 6 of Cenvat Credit Rules, 2004 could not be made applicable to them and the Cenvat Credit availed on input services viz. Renting of Immovable Properties at Ahmedabad....
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....is not registered with the department, Cenvat Credit can be availed by the appellant. 4.3 Now, the question before the Tribunal is whether appellant was providing taxable as well as exempt services but, failed to maintain separate accounts for them. Regarding this issue, I agree with the conclusion arrived at by the learned Commissioner (Appeals) in the impugned order. The learned Commissioner has concluded that there is no dispute in this case that the appellant is also engaged in the trading activity of Ortho items which is an exempted service being carried out from their Vapi premises. It is also not disputed that the appellant have their another units / branches at Bhandu, Bangalore, Ahmedabad, Devnath and Mumbai which are not registered with the department and not included in the Centralised Registration of the appellant. The appellant has contended that they had not availed any credit of input services in respect of their trading activity which is an exempted service. Hence, the provisions of Rule 6 of Cenvat Credit Rules, 2004 would not be applicable and the Cenvat credit availed on input services viz. renting of immovable property at Ahmedabad branch and security service....
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....h invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for- (a) the receipt, consumption and inventory of inputs used- (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exem....
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....or in relation to the manufacture of exempted goods or for provision of exempted services and on input services used exclusively in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services. Explanation III: No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services." 4.4 The learned Commissioner (Appeals) has rightly concluded that the appellant was engaged in trading activity (exempted service) apart from providing taxable output services, therefore, the provisions of Rule 6 of Cenvat Credit Rules, 2004 would certainly be applicable, in the circumstances of the case. When the appellant had availed Cenvat Credit on the input services which were to be utilized by the appellant for providing taxable output services as well as exempted service (trading) and did not maintain separate accounts / records in terms of 6 (2) of Cenvat Credit Rules, the appellant was bound to avail either of the options provided under Section 6 (3) as mentioned above. The appellant has rightly contended that it is up to him which option he wanted to avail and the depa....
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....t of goods as per their calculation based on evidence. I am of the view that the learned Commissioner should have provided the appellant an opportunity to submit the actual cost of goods as per their calculations based on evidence and thereupon, he should have arrived at the conclusion whether amount has been quantified correctly by the Adjudicating Authority. 4.7 The last argument of the learned Counsel for the appellant is that the department could not have invoked extended period of limitation because the appellant has never suppressed any material fact with intention to evade payment of tax. I do not agree with the contention of the learned Counsel for the appellant. I agree with the learned Commissioner that the appellant never disclosed that they were having branches / units which were not registered separately or not included in the Centralised Registration and that they were availing the Cenvat Credit on the input services which were being used in taxable as well as exempted services. The same was known only when the audit was conducted by the department. Therefore, I have come to the conclusion that the department has rightly invoked extended period in view of the inten....