2023 (10) TMI 1521 - AT - Service Tax

Reversal of credit on exempted Security Agency Services and Man Power Recruitment Agency Services provided to SEZ and J K units for the period April 2016 to March 2011 - HELD THAT - Reliance placed on THERMOTECH SYSTEMS LTD VERSUS C.C.E. -AHMEDABAD-I AND C.C.E. -AHMEDABAD-I VERSUS THERMOTECH SYSTEMS LTD 2023 (8) TMI 1135 - CESTAT AHMEDABAD in which in the face of reversal of proportionate Cenvat credit demand was dropped and only verification of the credit reversed was required. Appeal of the department is dismissed.

Summary

The Appellate Tribunal (CESTAT Ahmedabad) adjudicated a dispute concerning reversal of credit on exempted "Security Agency Services" and "Man Power Recruitment Agency Services" provided to SEZ and J&K units for the period April 2016 to March 2011. Although the department challenged procedural non-compliance regarding separate accounts and monthly returns, it did not dispute the quantum of credit reversed by the appellant during investigation.The appellant relied on the decision in Thermotech System Ltd Vs. C.C.E-CESTAT Ahmedabad (2023 (8) TMI 1135), where a proportionate reversal of Cenvat credit led to dropping of demand, requiring only verification of reversed credit. The Tribunal noted the original order's explicit finding that the appellant "voluntarily reversed the Service Tax credit amounting to Rs 1,31,628/- (incl. Interest thereon)" and that "the calculation of such proportionate basis... is found to be in order."Given this, the Tribunal held the Commissioner's order sustainable and dismissed the department's appeal, affirming that the verified reversal of credit negated the department's procedural objections.