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2015 (1) TMI 594 - AT - Service TaxCenvat Credit - Services provided to SEZ units - Exemption under Notification No. 4/2004-ST dt. 31.3.2004 - CENVAT Credit - Held that - In this case initially the appellant has claimed exemption under Notification No.4/2004-ST dt. 31.3.2004 on the clearance made to SEZ units. But after issuance of the show cause notice the appellant has paid the service tax on the exempted service along with interest. Therefore when the appellant has paid the service tax alongwith interest it cannot be said that the appellant has availed the benefit of Notification No. 4/2004-ST. Further more over we find that by insertion of Rule 6(6A) to the Cenvat Credit Rules 2004 by the Finance Act 2012 retrospective amendment was made and it was incorporated that there is no requirement of reversal of Cenvat Credit on the services provided to SEZ unit. Therefore in the light of this retrospective amendment and as the appellant has already paid the service tax we hold that appellants are not required to reverse Cenvat Credit as demanded in the impugned order. Accordingly demands confirmed in the impugned order are set aside - Decided in favour of Assesse.
Issues:
Service tax demand confirmation against the appellant for the period 1.10.2007 to 31.3.2008, restriction of credit utilization to 20% of the tax payable on output services, exemption under Notification No. 4/2004-ST, retrospective amendment in Cenvat Credit Rules 2004, denial of Cenvat Credit, payment of service tax on exempted services, benefit of Notification No. 4/2004-ST, Rule 6(6A) of Cenvat Credit Rules 2004, consequential relief. Analysis: The appellant appealed against the order confirming a service tax demand of Rs. 69,44,352/- along with interest and penalties under the Finance Act, 1994 for the period 1.10.2007 to 31.3.2008, restricting credit utilization to 20% of the tax payable on output services as per Rule 6(3) of the Cenvat Credit Rules 2004. The appellant, a Share Transfer Agent (STA) in Registrar to an issue (RTI), provided both taxable and exempted services to SEZ units during the period. The appellant claimed exemption under Notification No. 4/2004-ST but utilized the entire Cenvat Credit on input services towards tax payable on output services, contrary to the 20% restriction. A show cause notice was issued to the appellant, leading to the demand for excess utilization of Cenvat Credit along with interest and penalties. The appellant contended that after the show cause notice, they paid service tax on exempted services provided to SEZ units, thereby forgoing the exemption under Notification No. 4/2004. The appellant argued that they were entitled to full credit, citing a retrospective amendment in the Cenvat Credit Rules 2004 by the Finance Act, 2012, which eliminated the requirement of reversing Cenvat credit on services provided to SEZ units. The appellant referenced legal precedents to support their position and highlighted that the department dropped a similar demand for a subsequent period due to the retrospective amendment. Additionally, the appellant emphasized that since they paid service tax on exempted services post-show cause notice, Cenvat Credit denial was unwarranted, citing relevant case law. The Ld. A.R. reiterated the findings of the impugned order, leading to a hearing where both sides presented their arguments. The Tribunal considered the submissions and noted that the appellant paid service tax on exempted services after the show cause notice, indicating a forfeiture of the exemption under Notification No. 4/2004. The Tribunal also highlighted the retrospective amendment through Rule 6(6A) of the Cenvat Credit Rules 2004 by the Finance Act, 2012, which removed the need to reverse Cenvat Credit on services to SEZ units. Consequently, the Tribunal held that the appellant was not obligated to reverse the Cenvat Credit as demanded in the impugned order. As a result, the demands confirmed in the order were set aside, and the appeal was allowed with any consequential relief deemed necessary.
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