2015 (11) TMI 1105 - AT - Service Tax

Denial of CENVAT Credit - Banking and other Financial Services - Some of the services are partially exempted vide Notification No. 29/2005-Service Tax dated 22.2.2004 read with Valuation Rules - Held that - issue is full covered by Jost s Engineering (2013 (8) TMI 463 - CESTAT MUMBAI) and also in the case of Nagar Urban Co-operative Bank Ltd. (2014 (7) TMI 117 - CESTAT MUMBAI). I find that the appellant s case is squarely covered as in earlier order 2015 (11) TMI 952 - CESTAT MUMBAI . Further the aforementioned ruling was not available before the adjudicating authority at the time of passing of the impugned order and these rulings were pronounced subsequently. In this view of matter and after recording the finding that the appellant s case are covered by these two rulings I remand the matter back to the adjudicating authority with a direction to verify the amount of CENVAT Credit reversed. If the same is found to be short then the appellant may be allowed an opportunity to reverse the balance amount alongwith interest. It is also held that the Banking and other Financial Service which are the output service of the appellant are not fully exempted and accordingly do not fall under the category of exempt service as defined under Rule 2(e) of the CENVAT Credit Rules 2004. - Matter remanded back - Decided in favour of assessee.

Issues:
1. Availing CENVAT Credit on partially exempted services.
2. Requirement to maintain separate account or pay output tax under Rule 6(3).
3. Confirmation of demand, penalty, and interest.
4. Interpretation of Rule 2(e) of CENVAT Credit Rules, 2004.
5. Applicability of previous rulings by different tribunals.
6. Dispute on the impugned order.
7. Remand of the matter back to the adjudicating authority.

Analysis:

1. The appellant, a cooperative bank, availed CENVAT Credit on duty paid services partially exempted under Notification No. 29/2005-Service Tax. A show-cause notice alleged non-compliance with Rule 6(3) due to availing input tax and partially exempted output services. The Addl. Commissioner confirmed a demand of Rs. 5,53,861 along with penalties. The appellant contended that it reversed the total CENVAT credit for common input services, eliminating any tax liability under Rule 6(3).

2. The appellant referred to Rule 2(e) of CENVAT Credit Rules, defining exempt services. Citing precedents like the case of Nagar Urban Co-operative Bank Ltd., the appellant argued that the retrospective amendment of Rule 6(3) and the reversal of entire common input service credit amount to non-availment of credit. Rulings in similar cases like Jost's Engineering Co. Ltd. and Preeti Logistics Ltd. supported the appellant's stance that Rule 6(3) did not apply.

3. The Assistant Commissioner did not contest the appellant's reliance on previous rulings. The Tribunal noted that the issue was covered by Jost's Engineering and Nagar Urban Co-operative Bank Ltd. The appellant's case aligned with a previous order, leading to a remand for verifying the reversed CENVAT Credit amount and allowing the appellant to rectify any shortfall with interest. The Tribunal clarified that Banking and other Financial Services provided by the appellant did not qualify as fully exempt services under Rule 2(e).

4. The Tribunal allowed the appeal through remand, emphasizing the applicability of previous rulings and the need for the adjudicating authority to reassess the CENVAT Credit reversal amount. The decision highlighted the non-exempt status of the appellant's output services, contrary to the Commissioner's interpretation. The matter was remanded for further verification and compliance with the Tribunal's directions.

This detailed analysis of the legal judgment showcases the issues involved, the arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the case.

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