2021 (3) TMI 1157 - AT - Service Tax

CENVAT Credit - input services - case of Revenue is that appellant has not reversed the correct amount and that they have not furnished the workings for arriving at the amount reversed by them - period April 2016 to June 2017 - HELD THAT - The issue is confined to the lack of knowledge of the department as to how the amount of ₹ 43,979/- has been arrived by the assessee for reversing the proportionate credit. The department does not contend that the appellant has to reverse any other amount or that the amount reversed is incorrect. It only confines as to how the appellant has worked out the said amount. There are no merits in the confirmation of demand. Though in the Order in Original as well as in the first appellate authority s order, the department has discussed that the appellant has not put forward evidence to show that they had intimated the department as to the reversal of credit, there is no allegation in the Show Cause Notice that the appellant has not complied with the procedure of intimating the department as required under Rule 6(3A) of CENVAT Credit Rules. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Reversal of proportionate credit on input services for exempted output services.
2. Allegation of incorrect reversal amount without providing workings.
3. Compliance with procedural requirements under CENVAT Credit Rules.

Analysis:
1. The appellants provided 'Stock Broking Service' and 'Banking and Other Financial Services' using common input services for these output services. They reversed the proportionate credit on service tax for these input services due to the exemption of the output services. The department alleged incorrect reversal for the period April 2016 to June 2017, issuing a Show Cause Notice leading to the Order in Original confirming the demand. The appellant's appeal to the Commissioner (Appeals) was rejected, prompting this appeal before the Tribunal.

2. The appellant argued that they had reversed an amount of ?43,979 for the specified period but were accused of not providing the workings for this reversal as per the Show Cause Notice. The department contended that the appellant did not submit the necessary details, which the appellant disputed, stating that they had indeed furnished the required information. The Tribunal noted that the issue revolved around the lack of understanding by the department regarding how the appellant arrived at the reversal amount of ?43,979. The Tribunal found no merit in the demand confirmation, emphasizing that the department failed to prove any incorrectness in the amount reversed by the appellant.

3. The Tribunal highlighted that the department's focus was solely on the workings of the reversal amount, not on disputing the correctness of the reversal itself. The Tribunal observed that the absence of evidence regarding intimation to the department about the credit reversal, as required by Rule 6(3A) of CENVAT Credit Rules, was not raised in the Show Cause Notice. Citing a previous case, the Tribunal clarified that non-intimation is a procedural requirement and does not justify sustaining the demand. Therefore, the Tribunal set aside the impugned order, allowed the appeal, and granted consequential relief, if applicable.