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2020 (2) TMI 1579 - AT - VAT and Sales TaxCenvat Credit - demand of service tax - demand beyond the scope of show cause notice (SCN) - the show-cause notice is issued for disallowance of credit for contravening of the provisions of Rule 9 of CENVAT Credit Rules, 2004, the learned commissioner proceeds to deny the credit on co-relation between input service and output service. - HELD THAT - the input services claimed by the appellants are admissible for credit for rendering output services - Decision in the case of Millipore India Pvt. Ltd., 2011 (4) TMI 1122 - KARNATAKA HIGH COURT and Toyota Kirloskar Motor Pvt. Ltd., 2011 (3) TMI 1373 - KARNATAKA HIGH COURT followed. The services which are utilized by the appellants have nexus with the output services provided by them. Therefore, credit is also admissible. Regarding the other issues such as inclusion of the value of the services rendered by the branches situated in Jammu Kashmir in the total taxable value of the appellants; demand of service tax on the commission received in advance, we find that the submissions of the appellants are acceptable in view of the case laws cited by the learned counsel. Decided in favor of assessee.
Issues Involved:
1. Wrongful utilization of CENVAT Credit. 2. Inclusion of services rendered by branches in Jammu and Kashmir. 3. Inclusion of amounts already taxed by the credit card division. 4. Inclusion of commission received in advance. 5. Imposition of penalty and interest. Issue-Wise Detailed Analysis: 1. Wrongful Utilization of CENVAT Credit: The appellants, M/s. Syndicate Bank, were accused of wrongfully utilizing CENVAT Credit amounting to ?11,19,86,083/- and utilizing credit of ?2,38,55,544/- in excess of the 20% limit as per Rule 6(3) of CENVAT Credit Rules, 2004. The Department issued a show-cause notice on 21/10/2008, leading to a demand confirmation of ?5,09,85,560/-. The appellants argued that the Commissioner erred by disallowing CENVAT Credit due to the lack of direct or indirect relation between input and output services and by traveling beyond the show-cause notice. The Tribunal found that the Commissioner’s order was not legally sustainable as it traveled beyond the scope of the show-cause notice and ruled in favor of the appellants, allowing the input services claimed by them for rendering output services. 2. Inclusion of Services Rendered by Branches in Jammu and Kashmir: The Commissioner included an amount of ?60,29,237/- in the taxable value for services rendered by branches situated in Jammu and Kashmir. The appellants contended that this inclusion was erroneous. The Tribunal accepted the appellants' submission, referencing the case laws cited by the learned counsel, and ruled that such inclusion was not justified. 3. Inclusion of Amounts Already Taxed by the Credit Card Division: The Commissioner included an amount of ?2,06,56,304/- in the taxable value, despite the tax already being paid by the credit card division. The appellants argued this was incorrect. The Tribunal found the appellants' argument valid and ruled that the inclusion of this amount was unwarranted. 4. Inclusion of Commission Received in Advance: The Commissioner included an amount of ?44,29,37,535/- as commission received in advance in the taxable value. The appellants argued that liability to pay service tax arises only upon the provision of service, not on the receipt of advance commission. The Tribunal agreed with the appellants, citing various case laws, and ruled that the commission received in advance should not be included in the taxable value. 5. Imposition of Penalty and Interest: The Commissioner imposed penalties under Section 76 of the Finance Act, 1994, and Rule 15(3) of CENVAT Credit Rules. The appellants challenged this imposition, arguing that they had maintained proper records and followed the necessary procedures. The Tribunal found that the appellants had indeed maintained proper records and followed the prescribed procedures, thus ruling against the imposition of penalties and interest. Conclusion: The Tribunal allowed the appeal, granting consequential relief as per law. The Tribunal emphasized that the impugned order was not legally sustainable as it traveled beyond the scope of the show-cause notice. The Tribunal also reiterated that the input services utilized by the appellants had a nexus with the output services provided, thus making the credit admissible.
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