SC: Forfeiture of Earnest Money Impermissible When Both Buyer and Seller are at Fault  ||  Supreme Court: Gravity of Offence Cannot Defeat Speedy Trial; Pre-Trial Detention is Punishment  ||  SC: Terrorist Act under UAPA Includes Conspiracies to Disrupt Essential Supplies, Not Just Violence  ||  Supreme Court Directs Measures to Prevent False and Frivolous Complaints Against Judicial Officers  ||  SC: Mere Participation in Arbitration Doesn’t Bar Challenging Arbitrator; Waiver Must be in Writing  ||  SC: Under Order 1 Rule 10 CPC, the Plaintiff, as Dominus Litis, Cannot be Forced to Add a Defendant  ||  SC: Law Does Not Change With a New Bench; Decisions of a Coordinate Bench are Binding  ||  Delhi HC Absence of Formal Arrest under Section 311A Crpc Does Not Bar Giving Handwriting Samples  ||  Del HC: Security Guards Performing Duties Cannot Be Prosecuted For Wrongful Restraint or Molestation  ||  Bombay HC: Housing Society Earning From Telecom Towers Isn’t An ‘Industry’; Staff Get No Gratuity    

VLCC Healthcare Ltd. Vs. The Commissioner of G.S.T. & Central Excise, Chennai South - (Customs, Excise and Service Tax Appellate Tribunal) (11 Feb 2019)

When Appellant has reversed Credit as per Rule 6(3A)(ii) of CCR, 2004, Department cannot insist Appellant to pay an amount equal to 6% of value of the exempted services/products

MANU/CC/0050/2019

Service Tax

The Appellants are engaged in providing 'Beauty Treatment Service' and 'Health Club and Fitness Service'. They are also engaged in trading activity and selling their products, mainly cosmetics, to their customers. Their trading activity was deemed to be an exempted service with effect from 1st April, 2011. Since Appellants were using common inputs/input services for their trading activity also, the Department was of the view that, they are not eligible to avail the entire Credit. Though the Appellants had reversed Credit as per Rule 6(3)(ii) of the CENVAT Credit Rules (CCR), 2004, the Department took the view that, the Appellant has to pay 5%/6% respectively of the value of exempted services, as required under Rule 6(3)(i) of the CCR, 2004.

Show Cause Notices were issued for different periods raising the above allegations and proposing to demand the differential tax along with interest and also for imposing penalties. After due process of law, the Original Authority confirmed the demand, interest and imposed penalty. In appeal, the Commissioner (Appeals) vide impugned Orders upheld the same. Hence, present appeals.

The issue that arises for consideration in all these appeals is whether the Appellant is liable to pay an amount equal to 6% of the value of exempted services or products when they have opted to reverse the proportionate Credit in respect of the trading activity (exempted service).

As per the observation In the case of M/s. Mercedes Benz India (P) Ltd. Vs. Commissioner of C.Ex., Pune-I -, when the Appellant has reversed the Credit as per Rule 6(3A)(ii) of the CCR, 2004, the Department cannot insist that the Appellant has to pay an amount equal to 6% of the value of the exempted services/products.

The Department alleges that, since the Appellants have not maintained separate accounts, they have to pay an amount equal to 6% of the value of their exempted clearances for the reason that, they have not intimated the Department about exercising the option. Rule 6(3A) provides for intimating the Department by issuing a letter as to the exercise of option of reversal of proportionate Credit. In M/s. Mercedes Benz India (P) Ltd. Vs. Commissioner of C.Ex., it has been held that, said requirement is only procedural in nature and the substantive benefit cannot be denied on such grounds.

Further, in this case, the Appellants have in fact issued a letter dated 16th May, 2013 to the jurisdictional Range Officer, explaining that they were availing only the proportionate Credit on the value of taxable services, which is also reflected in their balance sheet as well as their ST-3 returns.

The Department ought to have taken note of the fact that, the Appellant has exercised the option. The Department cannot force the assessee to pay 5% or 6% of the value of exempted services when the assessee has exercised the option of reversing the proportionate Credit. In view of facts placed as well as the decision in the case of M/s. Mercedes Benz India (P) Ltd., the demand raised cannot sustain and requires to be set aside. The impugned Orders were set aside. The appeals are allowed.

Tags : DEMAND   CONFIRMATION   VALIDITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved