The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and thereby noting that the utilisation of credit for payment of service tax is valid.
The issue involved in the present case is whether the appellant, Integra Engineering India Limited, is eligible to utilize Cenvat credit of input and inputs service related to manufacturing of goods for payment of service tax on output service when the assessee is involved in both manufacturing as well as service providing.
The case of the department is that since the credit is availed on input and input service relating to manufacturing activity, the same cannot be utilized for payment of service tax of renting of immovable property. Accordingly, show cause notice was issued for demanding service tax on renting of immovable property service.
On the confirmation of demand, interest was also demanded under Section 75 and penalty was also imposed under Section 78 of the Finance Act, 1994. Being aggrieved by the order-in-original, appeal was filed before Commissioner (Appeals) who upheld the order-in-original and rejected the appeal filed by the appellant. Therefore, the present appeal.
Tapas Ruparelia, Chartered Accountant who appeared on behalf of the appellant, at the outset submits that there is no bar for utilisation of credit related to manufacturing activity for payment of service tax when the assessee is involved in both the activities i.e. manufacturing as well as provisioning of service.
Ajay Kumar Samota, Superintendent (AR) who appeared on behalf of the Revenue reiterated the findings of the impugned order.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “The issue is no more res-integra as it has been decided that utilisation of credit for payment of service tax is permissible. Therefore, the demand in the present case cannot be sustained. Accordingly, the impugned order is set-aside and the appeal is allowed.”
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