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2024 (10) TMI 220 - AT - Service TaxNon-reversal of proportionate CENVAT credit availed on common input services - trading of goods - exempt service in terms of section 66D(e) of the Finance Act - Chartered accountant services telephone services and legal services used in relation to redemption of mutual funds - Extended period of limitation. HELD THAT - The activity of subscription and redemption of the units of mutual funds cannot be said to be an activity of sale and purchase of the securities. It would therefore not be an activity relating to trading and securities. The activity undertaken by the appellant would therefore not be an exempted service in terms of section 66D(e) of the Finance Act and proportionate reversal of credit was not required to be made. Even otherwise the activity of investment in mutual fund cannot be termed as service under the Finance Act. For an activity to fall under the ambit of exempted service under rule 2(e) of the Credit Rules the activity has to first qualify as a service . Section 65B(44) of the Finance Act stipulates that service means any activity carried out by a person for another for consideration and includes a declared service but excludes a transfer of title in goods or immovable property by way of sale or gift - there has to be a service provider who provides a service to the recipient in lieu of consideration. The department has failed to substantiate that investment in mutual fund by the appellant involves a service rendered by a service provider to a service recipient. Thus the activity undertaken by the appellant would not amount to service under section 65B(44) of the Finance Act. It would therefore not be necessary to examine the alternative submissions raised by learned counsel for the appellant that reversal of proportionate credit of common input services utilized for rendition of exempted service along with interest in terms of rule 6(3)(ii) read with rule 6(3A) of Credit Rules would be sufficient compliance of rule 6 of the Credit Rules. Extended period of limitation - HELD THAT - The impugned order holds that it is because of the audit that the correct facts came to the notice of the department and so the extended period of limitation can be invoked - It is not possible to accept this contention as such a contention was repelled by the Tribunal in M/S GD GOENKA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX DELHI SOUTH 2023 (8) TMI 995 - CESTAT NEW DELHI where it was held that in the scheme of the Finance Act 1994 the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. The impugned order therefore cannot be sustained - appeal allowed.
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