The Custom, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad held that the repair services and Man Power recruitment in the State of Jammu and Kashmir are ‘exempted services’ so the original authority to re-determine the Cenvat Credit.
In the case of ECIL Rapiscan Ltd. vs. Commissioner of Central Excise, Custom and Service tax, the CESTAT found out that the service pertaining to maintenance, management, repair services and man-power recruitment which is rendered by the appellant in the State of Jammu and Kashmir are covered under the ambit of ‘exempted services’ and these services must be treated as ‘exempted services’
while computing the reversible or ineligible CENVAT Credit.
The appellant namely ECIL Rapiscan Ltd. is engaged in the supplying X-ray Baggage Inspection System (EBIS) and also provides an Annual Maintenance Contract (AMCs). And for this purpose, the appellant is registered with the service tax department for the purpose of providing maintenance, management, repair services, and manpower recruitment and the appellant is regularly paying the service tax. However, in the scrutiny, it was alleged that the appellant has availed the CENVAT Credit for which he was ineligible. For this matter, the service tax department issued the show cause notice.
The issue raised in this case was whether the appellant was ineligible for the CENVAT Credit or not?
The Custom, Excise and Service Tax Appellate Tribunal (CESTAT) comprising of a Technical Member, Mr. P.V. Subba Rao, and a Judicial Member, Ms. Rachna Gupta held that the repair services and manpower recruitment in the State of Jammu and Kashmir are ‘exempted services’ so the original authority to re-determine the Cenvat Credit.
The tribunal also observed that the value of services rendered in Jammu and Kashmir on which no service tax is leviable under the Finance Act, 1994 are ‘exempted services’ in terms of Rule 2(e) of CCR, 2004 as it stood during the relevant period and these services should be reckoned as such while deciding the amount of CENVAT Credit to be reversed.Subscribe Taxscan AdFree to view the Judgment