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2015 (10) TMI 2414 - DELHI HIGH COURT

2015 (10) TMI 2414 - DELHI HIGH COURT - 2015 (40) S.T.R. 417 (Del.) - Cenvat Credit - Use of capital goods in providing Airport services Chassis of motor vehicles were converted into toilet carts and water carts - Revenue alleged that during the period in question Respondent was providing both taxable and exempted services Further alleged that credit availed in excess of permissible limit of 20% on output services and motor vehicle chassis do not qualify capital goods in relation to airport .....

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ve that services were provided not to German Air Force but to German Embassy.

Eligibility of credit on Capital Goods - Chassis of motor vehicles were converted into toilet carts and water carts and were not registered - Used only for cargo handling services and not on roads Same eligible to be capital goods credit allowed. Decided against the Revenue. - CEAC 38/2015 & CM APPL 17506/2015 - Dated:- 1-9-2015 - Dr. S.Muralidhar And Mr. Vibhu bakhru, JJ For the Petitioner : Mr. Rahul K .....

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October 2009 the Joint Commissioner, Service Tax, New Delhi issued a show cause notice (SCN) under Section 73 of the FA to the Respondent requiring it to show cause as to why it should not be asked to pay service tax for wrongly having availed Cenvat credit in the sum of ₹ 39,99,705 during the period 2005-06 and 2008-09, during which period the Respondent was found to have provided 'airport services' taxable under Section 65 (105) (zzm) of the FA. The Respondent had been claiming .....

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es). It was alleged that the Respondent had availed Cenvat credit in excess of the permissible limit of 20% of the service tax payable on the output services. 3. The second aspect concerns availing by the Respondent of Cenvat credit of the Central Excise Duty paid on the Tata Chassis/motor vehicle in the sum of ₹ 4,70,490 during October 2007 to March 2008. The allegation here is that as per the definition of capital goods under Rule 2(a)(A) of the CC Rules, the motor vehicle chassis do not .....

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he German Air Force and not to the German Embassy or its Diplomats enjoying diplomatic status whereas Notification No. 33/2007-SERVICE TAX dated 23rd May 2007 only exempts services provided to a foreign diplomatic mission or consular post in India; and that since it was not providing airport services, the claim of Cenvat credit as regards the toilet cart and water cart deployed by the Respondent for cargo handling services ought to be allowed as they were capital goods. 5. It must be mentioned a .....

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l Excise on goods which are not eligible inputs or capital goods? 7. Learned counsel for the Appellant has taken the Court through order dated 23rd June 2011 passed by the Joint Commissioner, Service Tax as well as order in appeal dated 29th May 2013 passed by the Commissioner of Central Excise (Appeals) [ CCE(A)‟] both of whom have concurrently affirmed the demand as raised in the SCN. 8. In relation to the first issue concerning the nature of services provided by the Respondent the findi .....

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evenue has proved that appellant has provided exempted services. In fact in two of the invoices issued by the appellant to German Embassy, the appellant did not charge the service tax, does not mean that appellant has provided exempted services . 10. The Court finds that there is no factual basis for the CCE(A) to have concluded that on account of the bills for providing services having been raised on the German Embassy and the payments having been made by the German Embassy, the nature of servi .....

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asis. 11. It may be noticed at this stage that under Section 65(105) (zzm) of the FA as applicable prior to 1st July 2012, a taxable service included a service rendered by any person, by airports authority or by any other person, in any airport or a civil enclave . The proviso thereto was inserted with effect from 1st July 2010 and stated that Section 65 A (2) (a) of the FA which stated that the sub-clause which provides the most specific description shall be preferred to the sub-clauses providi .....

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rvice should be preferred over a general description. In other words, with there being nothing to show that during the period in question the Respondent was not providing cargo handling services at the airport to its customers, it should be held that the Respondent was providing a taxable service within the meaning of Section 65(105) (zr) and not 65 (105) (zzm) of the FA. 12. Since the entire basis of the SCN in relation to both the issues turns on whether the Respondent was providing airport se .....

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