2014 (1) TMI 622 - AT - Service Tax

Stay application - Reversal of CENVAT Credit - Held that - Assessee have been maintaining separate accounts for input services attributable to taxable services and exempted services and for the common input services, and that they have reversed the credit amount attributable to exempted services and such reversal should be sufficient for admission of appeal stay has been granted in the earlier case. Hence we waive the requirement of pre-deposit of dues arising from the impugned order for admission of appeal and there shall be stay of collection of dues arising from the impugned order during pendency of appeal - Stay granted.

Summary

Issues:
1. Reversal of Cenvat credit attributable to exempted service under Rule 6 of Cenvat Credit Rules, 2004.

Analysis:

The judgment by the Appellate Tribunal CESTAT CHENNAI dealt with a dispute concerning the reversal of Cenvat credit related to exempted services under Rule 6 of the Cenvat Credit Rules, 2004. The applicant, a provider of information technology services, had a mix of taxable and exempt services. They took full credit on input services linked to taxable services but did not claim credit on services clearly related to exempted services. For common input services, they followed the formula under Rule 6(3A). The Revenue argued that if Rule 6(3A) was chosen, it should apply to all input services collectively, not after segregating services as taxable or exempt.

The tribunal noted that this issue was recurrent and had been considered previously in another appeal by the same assessee, where a stay had been granted. In the current case, the applicant had maintained separate accounts for input services connected to taxable and exempt services, as well as for common input services. They had also reversed the credit amount associated with exempted services. Given these circumstances, the tribunal decided to waive the pre-deposit requirement for the dues from the impugned order for appeal admission. Consequently, there was a stay on the collection of dues arising from the impugned order during the appeal's pendency.

The judgment emphasized the importance of maintaining clear accounts for different types of input services and the reversal of credits linked to exempted services. By granting a stay on the collection of dues, the tribunal acknowledged the applicant's compliance with the requirements and allowed the appeal to proceed without the pre-deposit obligation.