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2017 (5) TMI 192 - AT - Service TaxRecovery of CENVAT credit - service provided in the State of Jammu and Kashmir - According to the impugned order, they were, in the circumstances of exclusion, permitted to discharge only 20% of the taxability by recourse to CENVAT credit for the period from 2006-07 to 2007-08 and the excess credit utilised was sought to be recovered - contention of assessee was that tax that was not leviable cannot be subject to circumscribing provisions of the tax laws and, even if it does, should not impinge upon the benefits of legislation flowing to assessees. Held that: - As the Finance Act, 1994 does not extend to State of Jammu and Kashmir, output services provided there are not subject to tax. However, in the matter of rendering such service, it is moot whether the provision of services to the excluded territory required additional use of input/input services. Nor is it the case of the tax authorities that the scale of services rendered in the rest of India could have been achieved by isolating a portion of the inputs/input services as attributable to services rendered in the State of Jammu and Kashmir. In such a situation, there is no logic or soundness to hold that the inputs/input services used for rendering 'broadcasting service' should be restricted to such as evidenced to have been used for rendering service in the rest of India. In these circumstances the availment the CENVAT credit to the full extent cannot be questioned. It's utilisation thereof cannot also be restricted. As the entire quantum of input services would be required to provide the taxable service, the scope for delineating that pertaining to the exempt service cannot be said to exist. Legislative intent would appear to have been targeted at precluding the utilisation of CENVAT credit that would not be available had the assessee restricted itself to taxable output services. There is no justification for invocation of rule 6(3) of CCR, 2004 to disallow any portion of the availed credit - appeal allowed - decided in favor of assessee.
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