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2019 (10) TMI 27 - HC - Service TaxImposition of tax and penalty - irregular availment of CENVAT Credit - inputs/input services used for provision of output services which are chargeable to duty or tax as well as exempted services - non-maintenance of separate records - Rule 6 of CCR - Maintainability of petition - HELD THAT:- he second respondent has brazenly exercised power under a provision which was not even available to him, as it was an enabling provision put in place for the benefit of the assessee, and arrived at a wholly unreasonable, if not absurd, result. That apart, the second respondent did not even choose to deal with the binding case law cited before him while dealing with the issues arising for consideration. This arrogant and arbitrary approach adopted by the second respondent cannot be countenanced - It would therefore not be necessary for the petitioner to go through the motions of a statutory appeal to challenge the same. CENVAT credit - HELD THAT:- Rule 6(3) of the CENVAT Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider - As rightly pointed out by Sri S.Ravi, learned senior counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed CENVAT Credit of ₹ 17,15,489/-. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. The Order-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced. Issuance of Debit notes - HELD THAT:- The disallowance of CENVAT Credit on the ground that the petitioner had availed the same by producing debit notes instead of invoices cannot be accepted. Petition allowed.
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