Relief to MHPL: CESTAT rules Rule 6 (3) B of CCR not applicable for demanding Service Tax for exempted services provided [Read Order]

In a major relief to M/s MHPL India Pvt Ltd, the Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that Rule 6 (3) B of the Cenvat Credit Rules, 2004 (CCR) not applicable for demanding service tax for exempted services provided.

The appellant is engaged in providing taxable services under the category of Works Contract Service, Goods Transport Agency Service and Construction Services other than residential complex including commercial or industrial buildings or civil structures. They are also availing Cenvat Credit facility on input and input services.

After completion of investigations, it was alleged that appellant have short paid the service tax are wrongly availed the Cenvat credit.

The appellant in the present case was paying service tax under the category of ‘Construction Services’ inrespect of pure service provided as per the work order. Such contracts have been accepted by the Hon’ble Supreme Court. Supply of goods which is under a separate supply order cannot be clubbed with the value of the work order for demanding the service tax. Further, no co-relation has been established or shown in the impugned order so as to clearly show this supply in respect of the same work orders.

A Two-Member Bench comprising PK Choudhary, Judicial Member and Sanjiv Srivastava, Technical Member observed that “In the present case appellant have reversed the entire Cenvat credit prior to the issuance of the show cause notice. Thus, situation is that the appellant have not at all taken any Cenvat credit and hence there cannot be any applicability of the provisions of Rule 6 (3) B of Cenvat Credit Rules for demanding the service tax in respect of the exempted services provided.”

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MHPL India Pvt. Ltd vs Commissioner of Customs, Central Excise & Service Tax , 2024 TAXSCAN (CESTAT) 145 , Dharmendra Srivastava , Manish Raj