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2017 (11) TMI 1468 - AT - Service TaxAbatement - N/N. 15/2004-ST or 01/2006-ST dated 01.03.2006 - denial on the ground that appellant availed CENVAT credit - Held that - Admittedly, the appellants availed credit on input services. That will bar them from availing said abatement. However, reversal of credit already availed will amount to non-availment of credit - abatement allowed. Reversal of credit - whether or not the appellants are covered by the said ratio of the decision in the case of CHANDRAPUR MAGNET WIRES (P) LTD. Versus COLLECTOR OF C. EXCISE, NAGPUR 1995 (12) TMI 72 - SUPREME COURT OF INDIA , with regard to the reversal of credit - Held that - The proportionate calculation of the input service credit attributable to the taxable output service of commercial or industrial construction can be categorically established from such records - in case of reversal of such proportionate credit attributable to commercial or industrial construction service then the appellants eligibility to the abatement is to be upheld - the appellant is covered by the ratio of the above case. Whether or not reversal of proportionate credit will satisfy the ratio with reference to non-availment of credit which is a condition for abatement? - Held that - It is clear that reversal of credit even to a proportionate extent attributable to a particular output service will satisfy the condition of Notification providing for exemption or abatement. The condition that no credit of tax paid on the input service will stand fulfilled if reversal of already taken credit is done. Appeal allowed - decided in favor of appellant.
Issues:
1. Eligibility for abatement under Notification No. 15/2004-ST dated 10.09.2004. 2. Reversal of credit availed on input services. 3. Verification of proportionate credit for abatement eligibility. Analysis: 1. The case involves a dispute regarding the eligibility of the appellant for abatement under Notification No. 15/2004-ST or 01/2006-ST due to the condition of non-availment of credit on input services. The appellant had availed credit on input services like GTA, Insurance, Telephone, and claimed a 67% abatement under the said Notification. The Revenue contended that the appellant was ineligible for abatement as they had availed credit on input services. The Tribunal referred to legal precedents, including decisions of the Supreme Court and High Courts, to establish that reversal of credit already availed would amount to non-availment of credit, thus entitling the appellant to the abatement. The Tribunal emphasized the importance of maintaining separate accounts for input services to determine eligibility for abatement. 2. The appellant argued that they availed credit on common input services but had subsequently calculated and reversed the proportionate credit attributable to taxable services under commercial or industrial construction service, fulfilling the condition for abatement eligibility. The Revenue contested the appeal, stating that the reversal was done after the original authority's adjudication, and the quantification of proportionate credit was not adequately explained. The Tribunal considered the appellant's assertion that they maintained invoice-wise accounts and could establish the calculation of input service credit attributable to taxable output services. The Tribunal highlighted the need for proper verification by the jurisdictional officer regarding the proportionate reversal of credit. 3. The final issue revolved around whether the reversal of proportionate credit would satisfy the condition of non-availment of credit, a prerequisite for abatement eligibility. The appellant relied on legal decisions to support their claim that even a proportionate reversal of credit would fulfill the requirement for exemption or abatement. The Tribunal examined various judgments, including those of the Supreme Court and High Courts, to conclude that the reversal of credit, even to a certain extent attributable to a specific output service, would meet the condition of non-availment of credit. The Tribunal emphasized that the correctness of the proportionate reversal of credit should be verified and confirmed by the jurisdictional authority. In conclusion, the Tribunal found that the impugned order was not sustainable based on the legal position established through previous cases. Therefore, the appeal was allowed, emphasizing the need for verification of the proportionate reversal of credit by the jurisdictional authority.
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