2016 (12) TMI 340 - AT - Service Tax

CENVAT credit - whether the ground that inputs services received, which was common to both the activities i.e. services provided and trading of goods and since trading activity was not taxable under the Central Excise Law and Service Tax Law, the benefit of cenvat credit was not available to the noticee, is justified? - Held that - the appellant s main contention is that the alleged trading activity is intimately connected with their core business activity of Erection Commissioning & Installation Services as well as Maintenance & Repair Services and also to their business of manufacturing of dutiable goods. Two purchase orders, submitted in support of their claim, were admittedly not produced before the adjudicating authority as well as Commissioner (Appeals). It would therefore be appropriate that the said two purchase orders are examined by the lower authorities so as to give a ruling on the contention made by the appellants - the matter is remanded to the adjudicating authority to examine the purchase orders and related documents submitted by the party and to adjudicate the case afresh after giving fair opportunity to the appellants - appeal allowed by way of remand.

Summary

Issues: Alleged trading activity related to core business services, availability of cenvat credit, retrospective effect of rule amendment, applicability of board circular, extended period for demand, examination of purchase orders.

In this case, the appellants appealed against the order of the Commissioner of Service Tax (Appeals), Pune, regarding the denial of cenvat credit due to alleged trading activity alongside their core business services. The Revenue contended that since trading activity was not taxable, cenvat credit was not available. The appellants argued that the trading activity was directly related to their taxable services and manufacturing of goods. The appellants cited two purchase orders from clients to support their claim, which were not presented before the lower authorities. The Tribunal decided to remand the case to the adjudicating authority for a fresh examination of the purchase orders and related documents to rule on the appellants' contention fairly.

The main issue revolved around the connection between the alleged trading activity and the appellants' core business services for cenvat credit eligibility. The Tribunal emphasized the need to examine the purchase orders submitted by the appellants, which were crucial in determining the relationship between the trading activity and the taxable services provided by the appellants. The decision to remand the case was based on the absence of these purchase orders before the lower authorities, highlighting the importance of presenting all relevant evidence during adjudication.

The appellants argued that the trading activity was intimately linked to their business of providing taxable services and manufacturing dutiable goods. They also raised points regarding the retrospective effect of the rule amendment and the applicability of a board circular. The Revenue, on the other hand, supported the findings of the Commissioner (Appeals) and highlighted the extended period for demand. The Tribunal's decision to remand the case indicated the significance of thoroughly examining all relevant documents and giving both parties a fair opportunity to present their arguments before reaching a final decision.

The Tribunal's order to remand the case for further examination of the purchase orders and related documents underscored the importance of providing complete evidence during proceedings to ensure a fair and thorough adjudication process. The ruling aimed to address the core issue of the alleged trading activity's connection to the appellants' taxable services and manufacturing activities, emphasizing the need for a comprehensive review to make an informed decision on cenvat credit eligibility in this complex scenario.