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TMI Blog2021 (9) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... In all, the nature of the transaction between the petitioner and Amazon is the trading of goods through Amazon for which Amazon provides various services to the petitioner. 3. Separately the petitioner participates in a programme called the Amazon Marketing Programme, as per which, Amazon offers promotional incentives to those who access its websites. Thus, and as part of the programme, discounts are offered by the petitioner through Amazon which are operative through specific promotion codes. For its participation in the programme, the petitioner receives compensation from Amazon. The aforesaid activity constitutes a declared service as defined in Section 66 E of Finance Act, 1994 (Act), taxable in terms of Section 65B (44) of the Act. Service tax is being remitted by the petitioner on the component of compensation. Amazon continues to extend the fulfillment and associated services in connection with the Amazon Marketing Programme as well, for which it is duly compensated by the petitioner. Thus the fulfillment services rendered by Amazon are utilized by the petitioner, both for the sale of its goods through the portal (hereinafter referred to as 'Direct Trading') as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut and input services taken during that period; or (ii) pay an amount as determined under sub-rule (3A): PROVIDED that if any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i): ................ 8. The petitioner, upon application of Rule 6(3) found that it had overpaid the quantum of taxes and thus claimed a refund of an amount of Rs. 47,38,050/- representing credit re-paid in excess, along with interest. 9. The petitioner's refund application was rejected and an order-in-original passed on 29.06.2016. The Assessing Authority rejected the claim primarily on the ground that there was no identity of input services as far as direct trading and incentive trading were concerned. Though certain other disqualifications are set out, only the disqualification at paragraph 19(v) is relevant to decide this Writ Petition and I hence extract the same below: '19. Non-eligibility of Cenvat Credit taken by the claimant: ................ (v) On perusal of the issue and the details given by the assessee it is seen that M/s.Rocky Marketing (Chennai) Pvt. Ltd. are doing trading by selling various products on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment/reversal as a result of which the Commissioner directed the petitioner to remit 7% of the value of exempt services vide Rule 6(3)(i) read with Rule 6(3D)(c) of the Rules. Thirdly, following the methodology set out earlier, he computed the excess paid at a sum of Rss.4,31,586/- along with interest thereon and directed refund of the same subject to the test of unjust enrichment. 12. As against the aforesaid order, the petitioner filed an appeal before the Customs, Central Excise and Appellate Tribunal (CESTAT). The appeal proceeds on the premise that the only dispute arising from the order of the first Appellate Commissioner, is as to whether Rule 6(3)(i) would apply to the facts of the petitioner's case or Rule 6(3)(ii). As far as commonality of input services is concerned, the observation of the Commissioner in this regard was not disturbed, as no appeal or cross objection was filed by the revenue challenging the same. 13. The Tribunal allowed the appeal filed by the petitioner vide order dated 03.11.2020 holding at paragraph 5, that the conclusion of the first Appellate Commissioner that the reversal of credit as per Rule should be as per Rule 6(3)(i), is against the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authority rejects the double claim, and rightly so. Moreover, the authority also refers to direct trading of certain products that do not form part of the original proceedings, such as Everest Masalas. 16. I had, in order to obtain clarity on the interpretation of the parties to the order of the first Appellate Commissioner, directed the petitioner to circulate copies of the statement of facts and grounds of appeal filed before the first and second Appellate Authorities and both are available on record. 17. Since the impugned communication is a show cause notice, the burden lies heavy upon the petitioner to establish that the same is bereft of jurisdiction, as the scope of interference under Article 226 in such case is limited. I would thus restrict the scope of examination to the question as to whether the impugned show cause notice stretches beyond the scope of remand by the CESTAT. 18. Two issues arise in the matter, viz., i) the entitlement to credit and ii) the quantification thereof. As far as entitlement is concerned, I am of the view that the issue stands decided at the level of the first Appellate Authority and hence the show cause notice purporting to re-open the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ratio is thus inapplicable to that class of cases in which the suit covers a horizon wider than the appeal, which happens when only a part of the decree which has been passed in the suit is carried in appeal to the higher Court, as in the present case. 24. Though the larger issue agitated by the petitioner relates to its entitlement for refund on the ground that excess tax has been paid by it, there are two issues that arise for separate determination. The first relates to whether there is commonality in regard to the input services availed. This issue, in fact, stands settled at the level of first appeal, not just because of the casual observation of the Commissioner on convergence of both parties, but since the Commissioner, in conclusion, has held that the petitioner is entitled to credit of refund computed under Rule 6(3)(i). Rule 6 itself comes into operation only in a situation involving common input service and clauses (i) and (ii) only prescribe different methods for attribution of the same. 25. Thus the larger, and implicit conclusion of the Commissioner is that the input services are indeed common, and that the quantification thereof would be in terms of Rule 6(3)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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