The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) viewed that the services availed at the workshop are taxable services, and held that no reversal is allowable on the amount out of Cenvat Credit availed at workshop under Rule 6(3) of Cenvat Credit Rules ( CCR ).
The Appellants M/s Premier Car Sales Ltd are engaged in trading of Motor Vehicles of Hyundai, and Honda two-wheelers and Piaggio three-wheelers. They have been registered under Service Tax for providing services of Servicing of Motor Vehicle’, `Business Auxiliary Services’ and `Renting of Immovable Property Services’.
During scrutiny of records of the appellants, it was observed that they had availed Cenvat credit in respect of service tax paid on various input services like telephone service, courier service, business promotion, cleaning and housekeeping, insurance, maintenance or repairs, advertisement etc.
It was alleged that some of the services had been used commonly for providing taxable services as well as non-taxable activities like trading motor vehicles. It was observed that while availing such Cenvat credit, Appellants had neither maintained separate accounts as prescribed under Rule 6(2) of Cenvat Credit Rules 2004, nor they had paid an amount as determined under Rule 6(3A) of CCR, 2004.
The appellants entered into a contract with NHAI secured though competitive bidding for engagement as the user fee collecting agency for collection of user fee and remittance of a fixed weekly amount for collection of said user fee.
It was held that the appellants have availed Cenvat credit relating to taxable and exempted services. Therefore an amount has been demanded for the period 2012-13 to 2014-15 @ 6% of the value of exempted services.
It has been held that the Appellants had chosen not to follow the statutory provision by not exercising any option in the form of Rule 6(2), Rule 6(3) and Rule 6(3A) of CCR, 2004 and that it was obligatory on a service provider to take all required steps including informing the jurisdictional Range Officer about the activity.
Since the appellants had not maintained separate records of input services, used in taxable services and exempted services, they lost the first option. Further to avail the benefit of second option, the Appellants were required to intimate in writing to the jurisdictional Superintendent by submitting certain particulars regarding the availment of the benefit provided by Rule 6(3A) of CCR, 2004.
It was submitted by the appellant that they have been maintaining separate records of input services availed at workshops and services availed at showrooms. They submitted that services availed at the workshop were exclusively related to the provision of taxable services. However, services availed at showroom can be said to be common to taxable and exempted services.
A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that services availed at the workshop were exclusively related to the provision of taxable services and therefore Appellants were not liable for the reversal of any amount out of the Cenvat credit availed at a workshop under Rule 6(3) of CCR, 2004.
The appellants argued that the ratio of taxable services to exempted services was 35:56 and on an attributable basis they were liable for the reversal of Rs.34,72,629/- under Rule 6 (3A) of CCR, 2004 and Rs.26,30,230/- towards interest. The Departmental Representative has not disputed the said payment as well as its computation.
As the Department has not disputed the said computation and payment of Rs.1.36 crores, the Tribunal ordered for the appropriation of the amount of Rs.34.95 lakhs along with interest due thereon from the deposit of Rs.1.36 crores.
Shri Kapil Vaish, Chartered Accountant appeared for the Appellant and Shri Sandeep Pandey, Authorized Representative appeared for the Respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
