2026 (5) TMI 1026

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...., Delhi, whereby the Commissioner (Appeals) rejected the appeal filed by the Appellant and confirmed the Order-in-Original dated 28.2.2022 passed by the Adjudicating Authority. 2. The primary question of law arising for determination in this appeal is whether the investment in mutual fund units by the Appellant constitutes trading falling within the negative list of services under Section 66D(e) of the Finance Act, 1994, and consequently whether such activity amounts to an outward supply of an "exempted service" within the meaning of Rule 2(e) of the CENVAT Credit Rules, 2004, so as to render the Appellant liable to reverse the CENVAT Credit availed on common input services under Rule 6(3) of the said Rules, together with interest and pe....

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....ce dated 8.4.2019 was issued to the Appellant invoking the extended period of limitation to show cause as to why:- "(i) Extended period of limitation as provided under proviso to Section 73(1) of the Act should not be invoked for demanding the amount under Rule 6(3) read with Rule 14 of the CCR, 2004 for an extended period of 5 years from the relevant date; (ii) Amount of 1,53,77,628/- as detailed in Table in para 6 above, towards exempted service should not be demanded and recovered from them under Section 73(1) of the Act read with Rule 6(3)(i) and Rule 14 of the CCR, 2004; (iii) Interest at the appropriate rate from the due date of the payment of Service Tax to the actual payment, should not be demanded and rec....

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....e' as defined under Rule 2(e) of the CENVAT Credit Rules, 2004. Consequently, the failure of the Appellant to maintain separate accounts for the receipt, consumption, and inventory of input services attributable to taxable and exempted activities rendered the Appellant liable to reverse the CENVAT Credit in terms of Rule 6(3) of the said Rules. 7. Per contra, the learned Counsel for the Appellant submitted that the mutual fund units in question were acquired solely for the purpose of making investments out of the Appellant's surplus funds, and that the same were accordingly reflected under the head 'Investments' in the financial statements, and not as stock-in-trade. It was further contended that the Appellant is not engaged in the busin....

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....e, which requires every adjudicating or appellate authority to consciously apply and follow binding or relevant precedents. Had the Commissioner (Appeals) duly considered that decision, the present appeal would have been avoided. 10. More recently, an identical issue fell for consideration before the Principal Bench of this Tribunal in M/s Siegwerk India Pvt. Ltd. v. Commissioner, CGST; 2024(10)TMI 220-CESTAT, New Delhi. The Tribunal, after an exhaustive examination of the relevant statutory provisions and the nature of mutual fund transactions, unequivocally held that the redemption of mutual fund units does not constitute "trading of goods" and cannot be treated as an "exempted service" requiring reversal of CENVAT Credit. The reasonin....