TMI Blog2021 (9) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... t is only on the aspect of quantification that the matter has been remanded by the Tribunal and the respondent ought to have restricted himself to a verification of this aspect alone. There are two opportunities that present to the respondent. The first is the filing of an appeal in terms of Section 86(1) of the Finance Act, 1994 which provides for an appeal to be filed by a person aggrieved by an order of the first appellate authority within three months from the date of receipt of the order. The second is in terms of Section 86(4) where either the Department or an assessee who has not filed an appeal against the order of the first appellate authority may, within 45 days of receipt of notice of an appeal filed by the other party, file a memorandum of cross-objection which shall be disposed by the Appellate Tribunal as though it were an appeal presented within the time stipulated for filing of an appeal. The identity of input services stands settled and it is only on the quantification thereof that the petitioner can be called upon to respond. Thus the respondent will issue a fresh show cause notice limiting the scope of examination to the quantification of input service alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading ). 4. The activity of trading of goods falls under Section 66D(e) of the Act, being the negative list, and receipts therefrom are exempt from the levy of tax as per Rule 2(e) of the Cenvat Credit Rules, 2004 (Rules). As a result, no tax is payable on the receipt of consideration from the activity of Direct Trading, which is an exempt service. 5. The period with which we are concerned in this Writ Petition is April, 2014 to October, 2015. The petitioner had availed cenvat credit of an amount of ₹ 86,10,981/- in respect of the compensation paid to Amazon for fulfillment services. Initially the aforesaid credit was used by the petitioner and set off against its output tax liability. Since it was advised that it would not be entitled to credit in respect of the exempt services, the petitioner made good the liability in that regard. 6. Later, the petitioner upon receipt of legal advice, took the stand that the fulfillment services constituted input service in terms of Rule 2(l) of the Rules. The aforesaid services were used in common, both for trading as well as the exempt services, thus bringing into play the provisions of Rule 6 of the Cenvat Credit Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of prices fixed by them and on the basis of prices fixed by M/s.Amazon. For both the cases M/s.Amazon is providing service of storing goods, preparing invoice and dispatch of goods and collecting service charges for the same services from M/s.Rocky Marketing (Chennai) Pvt. Ltd. M/s.Rocky Marketing (Chennai) Pvt. Ltd. availed credit of service tax involved on these services. This availment of CENVAT credit is not proper for the reason that these services are used by M/s.Rocky Marketing (Chennai) Pvt. Ltd. for selling of their goods which is trading and the same falls under negative list of services under Section 66 D (e) of the Finance Act, 1994 and hence they are not eligible to take credit in terms of Rule 2(1) of Cenvat Credit Rules, 2004. The input services received by the assessee namely service of storing goods, preparing invoice for sale of goods and dispatch of goods are used for sale of goods which is trading and such services are not required/related to the service of agreeing to the obligations to refrain from an act, or to tolerate an act or a situation, or to do an act , which is explained by them that the price of the goods will be fixed by M/s.Amazon and the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(3)(i), is against the provisions of law. The Tribunal upheld the entitlement of the petitioner for reversal after computing proportionate credit by applying Rule 6(3)(ii). Paragraph 5 contains two instances of a typographical error where instead of Rule 6(3) (ii) , the Tribunal has stated Rule 6(3 )(i) and learned Panel Counsel, on instructions, would confirm that the references to Rule 6(3)(i) in paragraph 5 should be read as Rule 6(3)(ii) . The Tribunal notes that the petitioner has furnished the details of the credit and directs the authority to quantify the amount for which purpose they remanded the matter to the adjudicating authority. 14. Paragraph 5 is extracted below for the purpose of clarity: 5. From the above, we have no hesitation to hold that the view taken by the Commissioner (Appeals) that the appellant has to reverse credit as per Rule 6 (3) (i) is against the provisions of law. The appellant would be eligible for refund after reversal/paying of proportionate credit on exempted services by applying Rule 6 (3) (i). This amount however has to be verified. Appellant has furnished details of the credit availed and the amount reversed by them along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and hence the show cause notice purporting to re-open the question of entitlement to credit, is bad in law. It is only on the aspect of quantification that the matter has been remanded by the Tribunal and the respondent ought to have restricted himself to a verification of this aspect alone. 19. Per contra, learned counsel for the respondent would state that the litigation in this case involves one comprehensive issue, i.e., being the entitlement of the petitioner for credit. Though the main issue may involve the adjudication of several aspects of the matter, the overarching lis concerns the entitlement of the petitioner to credit. The observation of the Commissioner to the effect that there is convergence on the aspect of commonality of services is, according to her, an incorrect and erroneous observation and should not stand in the way of a proper decision to be taken, substantially. 20. She would point out that there has never been convergence by the Department and the assessee on the issue of input services and thus, for the Commissioner to have stated so, is patently incorrect. However, she would accept the position that observation has been allowed to attain final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut services are indeed common, and that the quantification thereof would be in terms of Rule 6(3)(i). If the revenue had desired to pursue the stand that there was no identity of input services, it was incumbent for it to have challenged this conclusion. 26. In this regard, there are two opportunities that present to the respondent. The first is the filing of an appeal in terms of Section 86(1) of the Finance Act, 1994 which provides for an appeal to be filed by a person aggrieved by an order of the first appellate authority within three months from the date of receipt of the order. The second is in terms of Section 86(4) where either the Department or an assessee who has not filed an appeal against the order of the first appellate authority may, within 45 days of receipt of notice of an appeal filed by the other party, file a memorandum of cross-objection which shall be disposed by the Appellate Tribunal as though it were an appeal presented within the time stipulated for filing of an appeal. The respondent has missed both buses. 27. A perusal of the grounds of appeal filed by the petitioner before the Tribunal reveals that, had only the revenue perused the appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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