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TMI Blog2024 (7) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... activity is not carried out for any other person - In the present case admittedly the provisions of Rule 6(3) was neither invoked in the show cause notice nor invoked for the recovery of the CENVAT Credit under Rule 6 (3) of CENVAT Credit Rules therefore since the availment of credit is in is in order. In the peculiar facts of the present case, there is no machinery provision for recovery of CENVAT Credit, hence the demand of CENVAT Credit is not tenable. Time limitation - HELD THAT:- The fact which is not under dispute reveals the act of the appellant and the appellant had declared the details of credit taken by them on various input services during the period in dispute in compliance of the statutory requirement of filing monthly return - It is also observed that on merit the eligibility of CENVAT Credit even when the appellant provide the taxable output service or activity which is for themselves under which no Service Tax was paid is highly debatable, particularly when the Department has not invoked Rule 6(3) for recovery of CENVAT Credit, no suppression of fact can be attributed towards the appellant. Therefore, the demand is also not sustainable on the ground of time bar - t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant. 1.8. The Cenvat Credit availed by the Appellant was further utilized by the Appellant in discharging the Service Tax liability on the brokerage/ commission received by it since, the services provided by the Appellant to the investors/ client qualified as 'Output Services'. 1.9. Audits of the records of the Appellant was carried out by the Department on 17.10.2013 and 18.10.2012 for the period of 2007-08 to 2011-12 wherein the Audit officials were of the view that as far as the transaction with regard to PRO account is concerned, no service portion was involved in the transaction and no service tax was payable on the same. Therefore, in such cases, the services provided by the NSE were not eligible as 'Input Services'. Thus, the Appellant was not eligible to avail Cenvat Credit on such portion. 1.10. During the course of the audit and in accordance with the objection raised by the Audit officials, the Appellant paid the Service Tax amount of Rs. 1,32,03,526/- along with interest of Rs. 57,15,347/- for the period of 2008-09 to 2011-12. This fact is not in dispute. 1.11. In furtherance of the above payment, the Audit officials asked the Appellant to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed that the service rendered by NSE to the Appellant is an input service for the Appellant; however, the same is only an input service to the extent further services were rendered to the clients. As far as transaction with respect to PRO Account is concerned, there was no service portion involved and therefore, to that extent no Cenavt Credit was available to the Appellant. 1.19. The Appellant, being aggrieved by the Impugned Order has preferred the present appeal on the detailed grounds raised in the appeal memo. 2. Shri Jigar Shah learned Counsel appearing on behalf of the appellant submits as under:- A.4. The Appellant submits that no element of suppression of facts or fraud or wilful misstatement is present in the present case since, the Appellant has duly filed all the Returns on time and in accordance with law. To substantiate the same, the Appellant places reliance on the recent decision of the Hon'ble New Delhi Tribunal in the case of M/s GD Goenka Pvt. Ltd. v. Commissioner of CGST, 2023 (8) TMI 995- CESTAT NEW DELHI wherein it was categorically held that merely because the assessee is required to self- assess his tax liability and that the Department only came t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 73(3) of the Act held that in absence of any circumstances justifying exclusion of this provision and invocation of Section 73(4) of the Act, initiation of proceedings for imposition of penalties is unwarranted. A.9. Furthermore, the Board's Circular No. 137/167/2006-CX-4 dated 03.10.2007 clarified that as per the provisions contained in Section 73(3) of the Act, in case of payment of service tax and interest before the issuance of Show Cause Notice, the entire adjudication proceedings stand concluded. A.10. It is submitted that the judicial position stands settled in favour of the Appellant and therefore, in view of the same the Appellant's case is fit for applicability of Section 73(3) of the Act. Hence, the Impugned Order is liable to be set aside on this ground alone. B. The Appellant submits that the services by it from NSE qualify as 'Input Services' as the activity is related to business. B.1. It is submitted that the Department has wrongly alleged that the services received by the Appellant from NSE do not qualify as 'input services' to the extent the same are related to sale and purchase of shares from the Appellant's PRO accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading was a part of the Appellant's business and the definition of 'input service as it stood during the relevant time included activities relating to business, the Appellant is entitled to take credit of any service used in connection of its business. The fact that trading was not a 'service' prior to the amendment and that input services were used in connection to the business of the Appellant, the Appellant is entitled to take credit of the common input services and therefore, was not required to reverse any part of the said credit. C.3. It is submitted that above Explanation was introduced on 01.03.2011 vide Notification No. 3/11-CE (NT) and though the Explanation was introduced as a clarification, the Notification itself states that the said provision will come into force from 01.04.2011. therefore, the same cannot be given a retrospective effect. C.4. In this regard, the Appellant place reliance on the decision of this Hon'ble Tribunal in the matter of Infinium Motors Guj Pvt Ltd. v. CST-Service Tax- Ahmedabad, 2022 (11) TMI 948- CESTAT AHMEDABAD wherein the Hon'ble Tribunal had held that trading activity under Rule 6(3) was only made an exempt serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice tax paid on input services used in relation to the business of the assessee nor does it contain any provision allowing recovery of any credit of service paid on input services proportionately to the extent it is allegedly used in trading activity. C.7. Thus, as per Rule 3 of the Rules, 2004, the Appellant being an output service provider can take credit of all the input services received by it and there is no prohibition on availment on Cenvat Credit. The Impugned Order is liable to be set aside on this ground. D.1. If at all any restriction exists, the same is under Rule 6(1), (2) (3) of the Rules, 2004; therefore, it is very much necessary to discuss the provision of Rule 6 of the Rules, 2004; however, the Ld. Commissioner recorded that the Appellant's reliance on Rule 6 is baseless and erroneous. D.2. Rule 6(1) provides that Cenvat Credit shall not be allowed on such quantity of input or input services used in the manufacture of exempted goods or provision of exempted services. D.3. Further, as per Rule 6(2) if the service provider takes Cenvat Credit on inputs and input services and provides both taxable and exempted services, then the output service provider shall ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice itself is void ab initio. Thus, the Show Cause Notice is liable to be dropped herewith. F. Prior to 2011, there was no specific formula for reversal of Cenvat Credit availed on common input services used in relation to trading activity. F.1. Rule 6 of the Rules, 2004 was amended in 2011 by way of which sub- rule (3B) was inserted. Vide the said amendment, formula for deriving value for the purpose of sub-rule (3) and (3A) in case of trading, was introduced. Accordingly, prior to 01.04.2011, there was no specific method for deriving at the value of the trading of the goods for reversal of the Cenvat Credit of the input services used for trading of goods. F.2. Thus, since, the provision itself was absent, the Appellant cannot be held liable for non- reversal of Cenvat Credit to the extent services are used for trading of the goods. F.3. The Appellant places reliance upon the decision of the Apex court in the case of B.C. Srinivasan Shetty, (1981) 128 FTR 294 (SC), wherein the Hon'ble Supreme Court has held that none of the provisions pertaining to the head Capital gains suggest that they include an asset in the acquisition of which no cost at all can be conceived. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that the issue to be decided in the present case is that whether the appellant is entitled for CENVAT Credit on the input service which is attributed to output service that is stock broker services and other banking and financial services. The case of the department is that since the appellant, apart from providing service to their client also carrying out the activity of trading for themselves appellant did not entitle for CENVAT Credit. 4.1. We find that the demand of CENVAT Credit was raised under Rule 14 of CENVAT Credit Rules, 2004 which reads as under:- RULE 14. Recovery of CENVAT credit wrongly taken or erroneously refunded. Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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