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2022 (3) TMI 696 - CESTAT AHMEDABADWrongful availment and utilization of CENVAT Credit - recovery in cash of Service tax credit of wrongly utilized - credit on input services was denied on the ground that the input services were also used in PNG Sale i.e. trading activity - HELD THAT:- Since the input services were not used for providing of output services, the Cenvat credit used in such activity was denied. We observe that during the relevant period Appellant carried out three activities: (i) Providing Services of transportation of natural gas through pipeline on which service tax is paid (ii) Manufactured CNG gas from natural gas received from M/s Gujarat State Petroleum Corporation Ltd. and paid appropriate central excise duty on the same (iii) Purchased PNG from M/s Gujrat State Petroleum Corporation Ltd and sold it to its customers i.e trading activity on which no service tax is paid. As regard the trading activity specific amendment was made in the Cenvat Credit Rules, w.e.f. 1.4.2011 as per Notification No. 3/2011-C.E. (N.T.), dated 01.03.2011 wherein, the trading activity was incorporated in the definition of exempted services accordingly Rule (6) became applicable but it is only from 1.4.2011, prior to that there was no provision for either denial of credit or for reversal of the same. In this case, since the dispute is for the period of April 2006 to March 2007, the denial of Cenvat Credit not correct and legal. Clearly the position was clarified by the Government by insertion of Explanation only with effect from 1-4-2011 that the trading activity will be Exempted Services which cannot be given retrospective effect. Short payment of service tax - credit wrongly utilized in excess of availability during the period April 2006 to October 2006 - HELD THAT:- Since the Cenvat demand in the present case is not sustainable, the said input service credit was correctly utilized for payment of service tax during the impugned period and any short payment of service tax shall stand adjusted against the available credit including the credit in this case. Appeal allowed - decided in favor of appellant.
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