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TMI Blog2019 (2) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... been availing CENVAT credit as per CENVAT Credit Rules, 2004. During audit, it was noticed that the appellant had sold some of the flats after obtaining completion certificate in terms of Sec. 65B(44) and such transactions being transactions in immovable property cannot be treated as a service but fall under the category of transfer of property. In respect of other flats they have paid service tax under "residential complex services". The dispute is regarding common input services which were used both for those flats on which they have paid service tax and those flats on which they have not paid service tax holding them as 'not service' but as transactions in immovable properties. It is not in dispute that the flats which were sold post ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Finance Act, 1994." 3. It was the contention of the appellant that since the relevant period is prior to introduction of this explanation in the rule, they are not covered by the same. Agreeing with the appellant's contention the original authority dropped the demand. 4. Aggrieved, the department filed an appeal before the first appellate authority who, vide the impugned order, allowed the appeal of the department and directed the recovery of Rs. 11,23,424/- along with interest. Hence this appeal. 5. Learned Chartered Accountant for the appellant submits that prior to the introduction of this explanation (3) in Rule 6 there was no provision to recover proportionate amount of CENVAT credit in respect of common input services which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly on the input services which had not been used in rendering taxable output services; that they were not entitled to the impugned credit in terms of Rule 2(l) read with Rule 3 of CCR, 2004 and that when there was no nexus between the input services and the output service rendered by the respondents, irrespective of the inclusion of 'explanation-3' in Rule 6 of CCR, 2004 w.e.f. 01.04.2016 which is merely clarificatory, the respondents were not entitled to credit. Respondents have submitted that the decision made by the original authority is legally correct on the ground that the amendment to the definition of 'exempted service' in Rule 6(1) was effective only from 01.04.2016 and as a result, the transaction of sale of flats effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which were sold after obtaining occupancy certificates. In terms of section 66E(b) of the Act, 94 such transaction of sale is not a 'service' and thus not taxable. In terms of Rule 2(l) and Rule 3 of CCr, 2004 credit is available only when input services are used in provision of taxable output service. As there was no taxable service in such sale, the credit taken on input services used for such output services is ab intio inadmissible. As provided under Rule 6(2) of CCR, 2004 the respondent had the option to maintain separate accounts of such common input services used for provision of taxable and exempted services. In the instant case, respondents had not maintained such records. The demand proposed was on the ground that the credit av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 14 of CCR, 2004 was legally sustainable irrespective of the insertion of 'explanation-3' in Rule 6(1) of CCR, 2004 w.e.f. 01.04.2016. The explanation is in the nature of a clarification; it does not set new law; the law is contained in Rules 2(1), 3 and 6(1) of CCR, 2004 which was the same prior to and after the insertion of the subject explanation." 7. He would therefore argue that the explanation (3) to Rule 6(1) introduced with effect from 01.4.2016 is merely a clarification of the legal position which already existed which was that nobody is entitled to credit of inputs or input services unless they are used for provision of taxable services. Therefore the appeal may be dismissed and the impugned order may be upheld. 8. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of the tax paid. This was rectified by insertion of explanation (3) to Rule 6(1) with effect from 01.4.2016 vide notification 13/2016-CE (NT) dated 01.3.2016. This explanation however was not given retrospective application in the notification. I am unable to agree with the learned departmental representative that since this explanation is keeping in line with the spirit of the entire scheme of CENVAT Credit Rules, 2004 that credit is available only when tax is paid, it should be treated as having retrospective application. It is a well settled legal position that taxing statutes should be read as such without any intendment in it regardless of the consequences. It may result in an unfair taxation or an unfair benefit to the tax payer. E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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