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M/s Krishna Auto Sales Versus CCE & ST, Chsandigarh-I

Disallowance of CENVAT Credit on Input Services Service rendered is of sale of vehicles and repairs of the same - Appellant contended that they were not in obligation to maintain separate accounts as per Rule 6(2) as trading is not a service at all and there was no suppression of facts or willful mis-statement to evade duty.

Held That:- Trading activity not being a service at all, the appellant is not required to maintain separate accounts as per sub rule (2) of Rule 6 prior to 1.4. .....

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CESTAT, AHMEDABAD] followed.

Extended period of limitation - the issue reveals an interpretational issue - appellant was under the belief that trading not being a service at all there is no requirement to maintain separate accounts. - There is no suppression or wilful misstatement with intention to evade payment of duty thus extended period is not invokable Decided in favour of the Appellant. - Appeal No. ST/52320/2015-ST(SM) - Final Order No.52830/2015 - Dated:- 10-9-2015 - Ms. .....

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their authorized service station. Besides they also arrange finance and insurance of vehicles through Banks and Insurance Companies for which they receive commission. A show cause notice dated 31.12.2010 was issued alleging that appellant had wrongly availed Cenvat Credit of service tax paid on mobile phone bills for the period 2005-2006 (Rs.16,558), 2006-2007 (Rs.37,732), 2007-08 (Rs.33,665) and 2008-2009 (Rs.16,086). The appellants had adjusted an amount of ₹ 1,14,041/- payable as servi .....

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ing to the department, the mobile phones are used by sales representatives for sales promotion of vehicles, i.e., mainly for sale of vehicles. The activities of insurance, financing and repair/maintenance of vehicles are only incidental to the main activity. The main activity of the appellant being trading and the input service (mobile phone) having been used as common input services for both trading and output services of financing, insurance and authorized service station, per Rule 6(2) of the .....

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providing assistance for insurance and finance for vehicles. They are also engaged in purchase and sale of vehicles. The appellants were availing credit of service tax paid on mobile phone to discharge their service tax liability for the above output services. It is submitted that sub rule (2) of Rule (6) provides for maintaining separate accounts only when input services are commonly used for both exempted services and dutiable services. Trading has been categorized as exempted service only w. .....

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e account only in respect of exempted service and dutiable services. However, the learned counsel for appellant is correct in submitting that trading has been categorized as an exempted service only w.e.f. 1.4.2011. Trading activity not being a service at all, the appellant is not required to maintain separate accounts as per sub rule (2) of Rule 6 prior to 1.4.2011. So the view of department that the appellant is not entitled to credit for want of maintaining separate account is not correct. At .....

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T.R. 205 (Tri.-Ahmd.) has dealt with a similar situation as under:- In cases where an assessee is undertaking activities which cannot be called a service or which cannot be called manufacture, that activity goes out of the purview of both Central Excise Act as well as Finance Act, 1994. Therefore, we have a situation where an assessee would not be eligible to take input Service tax credit on an output which is neither a service nor excisable goods and at the same time there is no provision to co .....

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uantum of trading activity and other activity which is liable to service tax. The only obvious solution which would be legally correct appears to be to ensure that once in a quarter or once in a six months, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of service tax of output service. This proposition is not against the law in view of the fact that there are .....

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n input services attributable to trading activity. Obviously, the only solution that could be thought of what has been discussed above. In view of the above discussion, the matter is remanded to the Original Adjudicating Authority before whom the appellants shall present the details relating to service tax paid on input services attributable to trading activity and other services separately and after verification if felt necessary, the adjudicating authority shall quantify the amount to be rever .....

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ble to trading activity is not admissible. On merit I find that appellant is eligible for credit of service tax paid on input services attributable to output services which needs verification and quantification. 7. The next issue to be considered is limitation. The audit was conducted on 27.10.2008 and the SCN is issued on 31.12.2010 raising demand for the period 2005-06 to 2008-09. The learned counsel for the appellants vehemently argued that there was no suppression of facts or willful mis-sta .....

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