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TMI Blog2022 (8) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Martin Lottery. The Supreme Court, in effect, held that the use of the phrases, it is hereby declared or removal of doubts , in itself will not enable a presumption to be drawn that the Explanation is retrospective. The Tribunal in Trent Hypermarket [ 2019 (6) TMI 1327 - CESTAT MUMBAI] , while dealing with the definition of exempted service under rule 2(e) of the Credit Rules, held that trading cannot be treated as an exempted service for the period prior to 01.04.2011 and the Explanation added on 01.04.2011 was prospective and not retrospective. Thus, it is, therefore, clear that trading was not an exempted service prior to 01.04.2011. The demand confirmed in the impugned order cannot, therefore, be sustained and is liable to be set aside - Even otherwise, the demand for the period 2006 to 2008 would not survive as there was no restriction on availment of credit as the restriction was in respect of utilization. It also needs to be remembered that for not exercising the option under rule 6 of the Credit Rules, the option of payment of 6/8 percent of trading of goods ( exempted service ) cannot be thrust upon the appellant. This view finds support from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3)(1) of the Credit Rules. The first demand is for the period from April 2006 to March 2008 and is the amount paid in excess of 20% of service tax payable from the credit account, on account of credit of input services used in manufacture of dutiable goods/taxable services as well as in trading activity (exempted service) while the second demand is for the period from April 2008 to March 2011 @ 8%/6% of the value of traded goods (exempted service) on account of credit of input services used in the manufacture of dutiable goods/taxable services as well as in trading activity (exempted service). 4. The appellant is engaged in manufacturing and trading of pneumatic tools, material handling equipment and other related goods. The appellant is also engaged in providing taxable services of management consultants , consulting engineering , management, maintenance repair . 5. During the relevant period, the appellant received various services for carrying out the above activities of manufacture of dutiable goods, provision of taxable services and undertaking the trading activity. In respect of such input services, the appellant availed CENVAT credit and utilized the same for pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 07 to Sept, 07 1,17,782 1,17,782 23,556 94,226 4. Oct, 07 to March, 08 6,23,216 6,23,216 1,24,644 4,98,572 TOTAL 35,70,835 35,70,835 35,70,835 35,70,835 9. The demand for the period from April 2008 to March 2011 has been computed as under: Sl. No. Financial Year Value of the exempted services (in Rs.) % of the value of exempted services required to be paid under Rule 6(3)(i) of Credit Rules Amount required to be paid under Rule 6(3)(i) of Credit Rules 1. 2008-2009 24,54,33,000 8% 1,96,34,640/- 2. 2009-2010 25,75,95,000 8% 2,06,07,600/- 3. 2010-2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ] that the Explanation added with effect from 1.4.2011 is prospective and not retrospective; (iii) In any case, the demand for period 2006 to 2008 does not survive as there was no restriction on availment of credit and was with respect to utilization; (iv) For not exercising the option under rule 6 of Credit Rules by the appellant, the option of payment of 6/8% of trading of goods (exempted service) cannot be thrust upon the appellant. Hence the demand of Rs.5,98,82,040/- is unsustainable. In support of this contention reliance has been placed on the judgment of the Telangana High Court in Tiara Advertising vs. Union of India [2019 (30) GSTL 474 (Telangana)] and the decision of the Tribunal in Agrawal Metal Works Pvt. Ltd. vs. CGST [2022 (7) TMI 924]; (v) The extended period of limitation could not have been invoked in the facts and circumstances of the case; and (vi) The appellant was in any view of matter, only required to pay Rs. 8,40,835/- under rule 6(3A) for period 2008-2011 and payment of such amount would tantamount to full compliance of rule 6(3). 12. Shri B. K. Jain learned aurhorised representative appearing for the department however, supported that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted service prior to 01.04.2011 since the Explanation to rule 2(e) of the Credit Rules, as amended on 01.04.2011, is not retrospective in nature. 17. Rule 2 of the Credit Rules deals with definitions and rule 2(e) deals with the definition of exempted service . The definition of exempted service has undergone amendments from time to time and the definition as it stood from 2006 to 01.04.2011 and from 01.04.2011 onwards is reproduced below: 2006 to 1.4.2011 (e) exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act 1.4.2011 onwards (e) exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken Explanation - For the removal of doubts, it is hereby clarified that exempted services includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterlinks (supra) have held that inclusion in Explanation to Rule 2(e) trading was only clarificatory. It is further observed that the arguing counsels before the Hon ble Madras High Court did not refer to or relied upon the judgment of Hon ble Supreme Court in the case of Martin Lottery Agencies Ltd. (supra). Since, the law is well settled by the Hon ble Apex Court in context with retrospective or prospective operation of the statute, the principles enunciated in the case of Martin Lottery Agencies Ltd. (supra) will be considered as the guiding factor for deciding the issue involved in the present case. 5.6 In view of the above discussions, we do not find any infirmity in the findings recorded in the impugned order, holding that amendment to Rule 2(e) by Notification No. 3/2011-C.E.(N.T.) dated 01.03.2011 will have the prospective effect and cannot be applied retrospectively . Thus, we do not find any merits in the appeal filed by the appellant. (emphasis supplied) 21. The same view was expressed by the Tribunal in Lenovo (India) and the relevant paragraph is reproduced below: 7. We find that for the period 01.04.2011, the issue stands decided in the case of Me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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