TMI Blog2020 (1) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... AND THE COMMISSIONER OF SERVICE TAX, CHENNAI [ 2017 (6) TMI 635 - MADRAS HIGH COURT] and M/S. FL SMIDTH PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2014 (12) TMI 699 - MADRAS HIGH COURT] that either before 01.04.2011 or after this state trading activity is an exempted service. The amendment made with effect from 01.04.2011 specifying trading activity as an exempted service will not make a difference - Credit cannot be allowed. Services covered by Rule 6(5) of CCR, 2004 - HELD THAT:- These are eligible for cenvat credit notwithstanding Rule 6(1) and Rule 6(2) of the CCR, 2004 as the rule position stood during the relevant period. If any of the services in question were covered by Rule 6(5), theappellant is entitled to the full amount of cenvat credit even if the services were partly used for rendering exempted services also - this is also a matter which is fit to be remanded to the original authority for verification - matter on remand. Services rendered in Jammu Kashmir - HELD THAT:- The relevant period in this case is prior to 1-4-2011 when the definition of exempted service under Rule 2(e) of CENVAT Credit Rules, 2004 included any service on which no servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on them to explain why: i) an amount of ₹ 48,20,564/- equivalent to Cenvat Credit attributable to input services used for provision of exempted services should not be recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Rule 6(3A) of the Cenvat Credit Rules, 2004 and Section 73(1) of the Finance Act, 1994. ii) credit of Rs, 10,60,865/- irregularly taken by them on agency commissions should not be recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994. iii) interest at the applicable rate on the amount mentioned at (i ii) above should not be demanded from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994; and iv) penalty should not be imposed on them in terms of Rule 15(3) of the Cenvat Credit Rules, 2004. 4. After following due process, by the impugned order, the adjudicating authority has confirmed the demands as proposed along with the interest and imposed a penalty of ₹ 2,000/- upon the appellant under Rule 15(3) of Cenvat Credit Rules, 2004. 5. Aggrieved by this order, the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. He would therefore urge that the demand needs to be re-computed for this purpose. 8. His next argument is that all the services on which they have not paid service tax were treated as exempted services. This included services which they rendered in the state of Jammu Kashmir. Chapter V of the Finance Act, 1994 which levies the service tax does not apply to the state of Jammu Kashmir. Therefore, no service tax is levied on such services. When the Act itself does not apply to the services rendered in Jammu Kashmir the question of treating them as exempted services does not arise. Therefore, they are entitled to cenvat credit on the input services used in rendering services in the state of Jammu Kashmir even though no service tax is paid on such service. Therefore, the computation of demand of reversal needs to take this into account. 9. His next argument was that trading has been treated as an exempted service in the impugned show cause notice although the explanation to this effect has been inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a different period it has been held by this Bench that they are not entitled to cenvat credit on the agency commission because the commissions has been paid for procuring orders and not in relation to rendering the service. This decision was based on the judgment of the Hon ble High Court of Gujarat in the case of Cadilla Healthcare Ltd., [2013-1-TMI-304-Guj-HC]. We respectfully follow the decision of the Hon ble High Court of Gujarat even in this case and hold that the appellant is not entitled to cenvat credit on the agency commission paid for procuring order either for selling the goods or for procuring orders for AMC. 14. On the question of the trading activity being an exempted service only post 01.04.2011 we find that this issue has been settled by the Hon ble High Court of Madras in the case of Ruchika Global Interlinks (supra) and FL Smidth (supra) that either before 01.04.2011 or after this state trading activity is an exempted service. The amendment made with effect from 01.04.2011 specifying trading activity as an exempted service will not make a difference. Therefore, we find the argument of the appellant on this count without any force. We also find that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misoft Pvt. Ltd (2017 (47) STR 61 (Tri-Hyd) 18. We find that the case law at S.No. 3 above relied on S.No. 1 2 above. None of the three Orders appeared to have considered the definition of exempted service as per Rule 2(e) of the Cenvat Credit Rules, 2004. This definition was amended by Notification no. 28/2012- CE(NT), dated 20-6- 2012 with effect from 01-07-2012. We are also unable to determine whether the relevant periods of these case laws was prior to the amendment or thereafter. 19. On the other hand, the position of the Ld. AR is that when no service tax is payable under the Finance Act, 1994 it falls under exempted service as held in the case of Prathyusha Associates shipping P Ltd. [2014 (36) STR 1145 (Tri- Bang)]. This case pertained to the period prior to the amendment of the definition of exempted service and Rule 2(e) as applicable during the relevant period was considered. 20. We, therefore, find it important to examine the definition of exempted service under Rule 2(e) during different periods as follows: Before 1-4-2011 Rule 2 (e) (e) exempted services means taxable services which are exempt from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said meaning irrespective of the consequences. The relevant paragraphs are as follows: 19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences . If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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