Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2017 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (10) TMI 400 - CESTAT MUMBAICENVAT credit - Life Insurance Services - The revenue's case is that the Appellant was not entitled for the credit of services which has been exclusively used in providing the Life Insurance services under the Traditional Golden Plan which is not taxable simultaneously they have availed credit of common input service used in taxable policies as well as policies which had no risk portion and hence not liable to tax - Held that: - in terms of explanation to Rule 2 (e) of CCR, 2004 the services on which no service tax is payable is to be considered as exempted service and the credit of input or input services is not available to the service provider. The Traditional golden plan which does not have any risk cover and thus being not liable to tax falls under the category of exempted service at the relevant time. The Appellant though litigating the show cause notice and demand on merits had also prayed for reversal of credit instead of demand of 6% value of the exempted goods contending that the substantial benefit of reversing the credit should not be denied to them - it is their submission that they have been given option to reverse the proportionate credit and they cannot be forced to reverse 6% of the value of exempted goods in terms of Rule 6 (3) of CCR, 2004 - Held that: - the assessee cannot be forced to pay 6% of the value of exempted goods in case where they have availed the credit of input services used in exempted output services. The Rule 6(3A) of CCR, 2004 only contemplates procedure for application of Rule 6(3) and does not mandates that on failure to intimate in writing for availing option the manufacturer or the service provider shall lose their choice to avail option under Rule 6(3)(ii) for reversing proportionate credit. The procedure given therein and the conditions in said Rule 6(3A) is intended to make Rule 6(3) workable. It nowhere mandates to take away options exercisable available to the assessee. Rule 6(3)(i) cannot be made automatically applicable on failure to intimate in writing about option to be availed by the assessee. The assessee has the option either to reverse the proportionate credit pertaining to such exempted service or to pay 6% - It has been consistently held by this Tribunal that there is no bar on the assessee for reversal of credit said to have been accrued while providing exempted services. It is not disputed that the Appellant is engaged in providing both categories of services and therefore there is no reason to demand cenvat reversal in respect of credit of Insurance Auxiliary services. However, input services which are exclusively used for providing exempted service the cenvat credit on such services is not admissible in terms of Rule 6(5) of Cenvat Credit Rules, 2004. Time limitation - the Appellant has argued that the demand raised by invoking extended period of limitation cannot be made against them as there was no intention to evade the service tax or fraudulent availment of credit - Held that: - apart from the non declaration of exempted service or the credit pertaining to input services used therein, no other facts has been brought to the fore which can show that behind such alleged non declaration or availment of Cenvat Credit there was an intention to evade. The facts of such credit availment were recorded in books of accounts and the same was also presented before audit. There is no findings during investigation that the Appellant was intentionally availing cenvat credit with malafide intention - The issue involved is of interpretation wherein the department is of the view that the Appellant is not eligible for credit and they were liable to maintain separate accounts in order to avail credit when input services were common or non entitlement when the services were exclusively used in exempted service. Whereas, the appellant were under the belief that the activities not being exempted, the credit is eligible. On such ground also there is nothing to establish suppression or willful misstatement with intention to evade payment of duty on the part of appellants - extended period cannot be invoked and demand is clearly time barred. Penalty - Held that: - since, there is no suppression of fact or intention to avail any illegal credit, penalty is set aside. Appeal allowed - decided in favor of appellant.
|