AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1445
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.... Service tax amounting to Rs. 414187. Service tax amounting to Rs. 61693. Reversal of cenvat credit of Rs. 2796752 with interest and penal es. Both these appeals were listed on 13.03.2026 when none had appeared for the appellant. The order dated 13.03.2026 reads as follows: - "None is present for the appellant. The appeal pertains to the year 2018. Perusal of file reveals that vide order dated 18.07.2025, the appellant was already warned with last opportunity. Despite those warnings it is the fourth me that the appellant has opted to not to appear. Resultantly, we refrain ourselves to adjourn the appeal any further. Learned Departmental Representative has filed the written synopsis. Arguments on behalf of the department heard. Order stands reserved. Ten days' me, however, is given to the appellant to file the submissions, if desired." Later written submissions were filed by the appellant. 2. Briefly stated, M/s Haldiram India Pvt. Ltd., the appellants, are registered with the service tax department for providing taxable service under the category of "Franchise Service". They are also engaged in trading of Bhujiya, Papad Fried, Namkeen etc., being the registered p....
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....ration paid includes the amounts of reimbursement towards the value of local govt. fees/amounts paid by appellant's authorized attorney in foreign countries while providing services of registration/renewal of appellant's Trademark as the same pertain to statuary fee deposited to the Govt. 6. With respect to objection no. 3, it is mentioned that they had taken the Cenvat credit on the service tax paid on the value paid only for receiving 'Legal and Professional Services' in respect of the li ga on/advisory maters vis-à-vis the ownership and protection of trademark/brand. Cenvat credit is denied to have been availed on the service tax paid for other services. The Output services provided is with respect to the use of brand name by various manufacturers (franchisee Service) wherein the appellants charged the amount for the use of trademark for the manufacture of the items under 'Haldiram Brand' by the respective manufacturers. There is direct correlation between the input services and output services. It is admi ed that appellants do trading in the items which are manufactured by the various manufacturers under the 'Haldiram Brand'. However, those manufacture....
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....006 (hereinafter referred as valuation rules). We observe that the said ruled is held to be repugnant to Section 67 of the Finance Act, 1994, by the Hon'ble Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India 2013 (29) S.T.R. 9 (Del.). The relevant extract of the decision of the Hon'ble High Court is reproduced hereinbelow: 18. Sec on 66 levies service tax at a particular rate on the value of taxable services. Sec on 67 (1) makes the provisions of the sec on subject to the provisions of Chapter V, which includes Sec on 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Sec on 66 which levies a tax only on the taxable service and nothing else. There is thus in-built mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (i) of sub-sec on (1) of Sec on 67 provides that the value of the taxable service shall be the gross amount charged by the service provider "for such service". Reading Sec on 66 and Sec on 67 (1) (i) together and harmoniously, it seems clear to us that in the valuation of the taxable servic....
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....od in dispute for both the show cause notices is prior to May 2015. Hence it is held that the service tax on the value of reimbursable amount has wrongly been confirmed. The service tax paid by the appellant while receiving both the impugned services was already paid under RCM. This issue therefore stands decided in favour of the appellant. 12. Issue No. 2 12.1 It is alleged that the appellant was providing taxable (Franchise Service) as well exempted service (sale of goods/food products). It is also alleged that the legal services, import thereof was received by the appellant in relation to both the said activities 12.2 There is no denial to the fact that the appellant was providing taxable as well as exempted services. Credit availed on such common input service has been denied. We observe that there is no evidence on record to show that proper and correct entries on account of proportional availment of common inputs received for both the activities of the appellant were being maintained by the appellants. Though the separate records were maintained under Rule 6 of Cenvat Credit Rule, 2004 (CCR) but we observe that the appellant has taken credit of entire service tax pai....
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....he appellant for the services which are directly and wholly attributable to the trading activities would not be eligible as credit, as the definition of the input services indicates that the credit is eligible only in "respect of manufacture" of the final product and clearance of the final product from the place of removal. The question of manufacturing the final product, in the case of trading activity does not arise as it is an admitted fact that the appellant purchased these goods for the trading activities, in their retail showroom. As such, we are of the view that the credit availed on the services which are directly attributable to the trading activity is ineligible to be availed as input service credit. Accordingly, we uphold the impugned order to the extent it denies the credit of the service tax paid on the services amounting to Rs. 13,27,497/ -. " In view of the above discussion, we do not find any infirmity in the order under challenge when the Cenvat Credit is ordered to be reversed. Thus issue no. 2 stands decided in favour of the department. 13. Issue No. 3 13.1 From the findings at Issue No. 2 the appellant concededly did not maintain regular separate accoun....