The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal has held that trading is not an exempted service before 01.04.2011 and the demand for tax on credit of input services used in trading activity is not sustainable.
Shri B.L. Narasimhan, Advocate appeared for the Appellant and Shri B.K. Jain, Authorized Representative of the Department
M/s. Ingersoll Rand Industrial Products Private Limited, the appellant challenged the order dated 28.03.2013 passed by the Commissioner, Customs, Service Tax and Central Excise, Ghaziabad.
The appellant engaged in the manufacturing and trading of pneumatic tools, material handling equipment and other related goods. The appellant is also engaged in providing taxable services of “management consultants‟, “consulting engineering‟, and “management, maintenance & repair‟.
In respect of input services received, the appellant availed CENVAT credit and utilized the same for payment of its outward tax liability. The impugned order confirmed the demand in two parts. The first demand of Rs. 28,56,667/- was under rule 6(3) (c) of the CENVAT Rules for the period from April 2006 to March 2008, while the second demand for Rs. 5,98,82,040/- was under rule 6(3)(1) of the Credit Rules for the period April 2008 to March 2011.
It was evident from the amending provisions of Cenvat statute w.e.f. 01.03.2011 that a substantive law was enacted to consider the activities of trading as an exempted service.
The Tribunal observed inthe case of Mercedes Benz India Pvt. Ltd, it was held that “trading is not an exempted service before 01.04.2011; provisions of Rule 6 requiring reversal of 6% of trading turnover is not applicable.”
A Coram comprising Mr Justice Dilip Gupta, president and Mr P Anjani Kumar, member (technical) observed that trading was not an exempted service and set aside the demand confirmed in the impugned order being not sustainable.
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