By TIOL News Service

NEW DELHI, MAR 14, 2018: THIS is a Revenue appeal.

The respondent during the period under consideration (2010-2011) was providing services and availing CENVAT credit on various services like telephone, advertisement, renting, insurance, banking, maintenance and repair, courier, security and other financial services.

From the premises where they are providing the taxable service, they were also carrying out the sale of cars.

Department was of the view that the activity of trading, which was also carried out by the appellant from the same premises, in addition to carrying out the service of authorized service for four wheelers, is to be considered as an exempted service.

Inasmuch as since the respondent did not maintain separate accounts for the input services used towards the taxable activity as well as exempted activity, the respondent will be required to pay an amount in terms of Rule 6 (3A) of the Cenvat Credit Rules, it was alleged.

Both the authorities below dropped the demand and, hence, the Revenue is in appeal.

The AR submitted that the activity of trading has been specifically included as an exempted activity w.e.f. 01/04/2011 by way of amendment carried out in the CCR, 2004 vide Notification No. 03/2011-CE (NT) dated 01/03/2011. Therefore, the activity of trading has to be considered as an exempted service even for the disputed period i.e. 01/04/2010 to 31/03/2011.

The respondent submitted that the notification cannot be held to be having retrospective effect.

The CESTAT held -

"6. Both the authorities below have taken the clear stand that the activity of trading has come under the category of exempted service only w.e.f. 01/04/2011 and the said amendment carried out to Cenvat Credit Rules cannot be considered as having any retrospective effect. Therefore, we find no reason to interfere with the impugned order…"

The Revenue appeal was dismissed.

(See 2018-TIOL-814-CESTAT-DEL)