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2015 (6) TMI 271 - AT - Service TaxDemand of Cenvat Credit - Business Auxiliary Services - Trading activity - Held that:- The appellant is not an output service provider in respect of trading. - Mercedes Benz judgment [2014 (4) TMI 12 - CESTAT MUMBAI] also held that the formula introduced in Rule 6 in 2011 cannot be applied retrospectively. Following this judgment, I hold that the amount of credit to be disallowed was correctly computed by the adjudicating authority. The reliance by the learned Counsel on the case of Sai Sathya Said Inst. (2003 (9) TMI 94 - SUPREME COURT OF INDIA) is inappropriate. The department is not imposing a condition which is not in the Rules. Department is merely saying that input credit is available under Service Tax law for providing output services in terms of the definition of input service in the Cenvat Credit Rules whereas the trading activity is outside the purview of service tax law. Bar of limitation - appellant have not declared in their ST-3 returns that the input service credit was used in relation to trading. This amounts to suppression of facts. Therefore, the extended period of limitation is correctly invoked as the appellants are following self assessment procedure and taking credit on their own against the provisions of law. Therefore, the present case is distinguishable from the case of Landis +GYR Ltd. Reliance is placed on the case of Mercedes Benz (supra) as that judgment involved the same circumstances as far as the issue of time bar is concerned. Reducing penalty to 50% of amount confirmed under proviso to Section 78(1) is bad in law because the proviso became effective from 08/04/2011 whereas the period in the present case is from 2006-2007 to 2010-2011. I am also inclined to agree with the learned AR that the department was not put to notice on application of Rule 6(3A) by the Commissioner (Appeals) when the show-cause notice did not state this. I find that principles of natural justice have been violated. However, I have already decided the issue on merits in favour of Revenue. In view of applicability of extended time period for suppression of facts, I uphold the penalty equivalent to amount of Cenvat Credit demanded as held by the adjudicating authority. - Decided against assessee.
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