2013 (7) TMI 705

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..... hotels are known as Indian Hotels Company Ltd. The respondents were rendering taxable service such as Beauty Parlour Services, Health Club and Fitness Centre Service, Internet Cafe, Dry Cleaning and Mandap Keeper Services. They were also rendering exempted/non-taxable services such as hotel accommodation, restaurant and bar services. The appellant availed CENVAT credit of service tax paid on certain input services which were utilised both in respect of taxable services and exempted services as per Rule 6 (5) of the CENVAT Credit Rules, 2004. As per the said rule, in respect of certain input services, the credit was permissible so long as the input services were not used exclusively in or in relation to manufacture of exempted goods or prov .....

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..... volves around the word 'allowing credit'. The purpose of allowing credit is for utilisation of credit, otherwise the purpose will be completely lost if the word 'allow credit' is interpreted in a restrictive and narrow manner. He also relies on the Circular dated 01/10/2007 issued by the CBEC giving the rationale for allowing the CENVAT credit on specified input services when they are used in exempted as well as taxable services. Para 2 of the said circular is reproduced below:    "2. The matter has been examined. The basic purpose of identifying 17 specified services for special dispensation is that these services are used in relation to the entire activities of the service provider and cannot be co-related or apportioned with a .....

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..... ue's appeal. 6. We have carefully considered the submissions made by both the sides. The purpose and objective of CENVAT credit Rules it to allow a manufacturer/output service provider not only to take the credit but also to utilize the same for the purposes specified in the said Rules. The respondents herein are output service providers who discharge service tax liability. Therefore, if they are allowed only to take credit and not to utilize the same, the objective of the CENVAT Credit Rules cannot be achieved. There is no reason for interpreting the term "allow" in a narrow and restrictive manner as urged by the Revenue. The said interpretation urged by the Revenue defeats the object and purpose of the CENVAT Credit Rules. Rules cannot b .....

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