2015 (9) TMI 1034 - AT - Service Tax

CENVAT Credit - Common input service - reversal of credit under Rule 6(3) - making payments as per prescribed percentages - Held that - Appellant vide letter dated 21.04.2009 opted for payments at prescribed percentages on the value of exempted services under Rule 6 (3) of the CENVAT credit Rules, 2004 and also paid amounts for the earlier periods 2008-09 and 2009-10. First appellate authority has rejected appellant s appeal only on the ground that an option given cannot be effective for the earlier period. It is observed from CBEC Circular No. 868/6/2008-CX Dated 09.05.2008 that there are only following two procedures to be followed where CENVAT credit - There is no fact on record that appellant at any stage opted for opinion-(ii) . On a particular date he paid amounts @ prescribed as per option (i) above even for the past period. In the absence of any contrary fact it cannot be said that appellant changed the option in a financial year. Appellant has all through opted for payment of amounts as per prescribed percentage of the value of exempted services, may be at a later date. There is no bar for making payments as per prescribed percentages for the prior period also as it may not be feasible to segregate quantum of input service credit pertaining to dutiable and exempted services - Decided in favour of assessee.

Summary

Issues:
1. Appellant's appeal against OIA upholding OIO.
2. Payment of service tax on various services.
3. Maintenance of separate accounts for dutiable and exempted services.
4. Option under Rule-6(3) of Cenvat Credit Rules, 2004.
5. Appellant's compliance with CBEC Circular No. 868/6/2008-CX.

Analysis:
1. The appeal was filed against the Order-in-Appeal (OIA) upholding the Original Order (OIO) by the Commissioner (Appeals) Vadodara. The appellant argued that they are paying service tax on Business and Exhibition Services, Advertisement Sale of Space or time services, Screening of Movies, and Sale of food items, which are exempted services. They claimed that maintaining separate accounts for dutiable and exempted services was not feasible. The appellant opted for 12% payment on the value of exempted services under Rule-6(3) of Cenvat Credit Rules, 2004, without the requirement of providing this option in writing to the Department. The appellant contended that they never opted out of this option for the relevant period. The first appellate authority's decision was challenged based on case laws and CBEC Circular No. 868/6/2008-CX.

2. The Revenue argued that the appellant could not retrospectively exercise the option for the earlier period, and thus, the credit taken was improper. The Revenue supported the lower authorities' decision. After hearing both sides and examining the case records, it was found that the issue revolved around the appellant providing both dutiable and exempted services while availing CENVAT credit on common input services. The appellant had opted for payments at prescribed percentages on the value of exempted services under Rule 6(3) of the CENVAT Credit Rules, 2004, and had paid the amounts for the previous periods as well.

3. The Circular highlighted two procedures for cases where CENVAT credit is taken for dutiable and exempted services. The appellant had consistently paid amounts according to the prescribed percentage of the value of exempted services, even for past periods. This action was deemed justified as there was no evidence of the appellant changing the option during a financial year. The appellant's compliance with the prescribed percentages for the prior period was considered valid, especially since segregating input service credit for dutiable and exempted services might not be practical. Consequently, the appeal was allowed with any necessary consequential relief.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal provisions involved, and the rationale behind the final decision, providing a comprehensive understanding of the case.