Bank of India Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
CESTAT Kolkata remanded Bank of India’s appeal concerning CENVAT credit on input services used for both taxable and exempted services. The demand arose because the appellant had allegedly not maintained separate accounts for such input services, resulting in a demand based on 5%, 6% and 8% of the tax payable on exempted services. The adjudicating authority confirmed a demand of Rs.5,41,352/-, which was affirmed by the Commissioner (Appeals).
The appellant contended that it had taken CENVAT credit of only Rs.9,297/- in respect of commonly used services, while the demand was Rs.5,41,352/-. CESTAT noted that the Allahabad High Court in Hello Minerals Water Pvt. Ltd. v. UOI had held that reversal of the Service Tax credit itself would be sufficient where input tax credit was used for taxable and exempted services.
Following this approach, the Tribunal directed the appellant to clarify the exact amount of CENVAT credit relating to input services commonly used for taxable and exempted services and reverse that amount along with interest. After documentary verification and reversal, the balance demand was to be set aside. All penalties were also set aside. The matter was remanded to the adjudicating authority for verification of the details and completion of the proceedings. The appellant was directed to cooperate so that the matter could be closed within four months from the order.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellant has filed this appeal on 2nd April 2019. They have not been appearing for the hearings whenever the same is communicated to them. In the interest of justice, I have taken up the appeal itself for disposal with the help of the Learned AR.
2. On going through the records, I find that the proceedings have been initiated against the appellant on the ground that they have not maintained separate accounts for the input services used both for providing the taxable services as well as towards provision of exempted services. The demand has been raised based on 5%, 6%, and 8% of the tax payable on the exempted After the due process, the adjudicating authority has confirmed the demand of Rs.5,41,352/-. On appeal, the Commissioner (Appeals) has affirmed the same. Therefore, the appellant is before the Tribunal.
3. From the records and statement of facts and the grounds of appeal taken by the appellant, it is seen that the appellant is claiming that they have taken the CENVAT Credit in respect of commonly used services to the extent of only Rs.9297/-. Their grievance is that when they have taken the CENVAT Credit to this extent, the demand has been made for Rs.5,41,352/-.
4. I find that this issue has reached Tribunals and High Courts on several occasions. The Allahabad High Court in the case of Hello Minerals Water Pvt. Ltd. v. UOI has held that in cases where the input tax has been taken as credit for usage in provision of taxable and exempted services, the reversal of the Service Tax itself would be sufficient. Similar decisions have been given by various Tribunals.
5. Therefore, I find that in this case also, such this remedy should be given to the appellant. The appellant should be asked to clarify the exact quantification of the CENVAT Credit input services which have been used commonly between the taxable and exempted services and should be asked reverse the same alongwith interest. Once the appellant brings out all the documentary evidence and then reverses this amount, the balance demand amount should be set aside. All the penalties are being set aside.
6. For this purpose and for verification of all the details to be given by the appellant, I remand the matter to the adjudicating authority.
7. The issue pertains to the year 2019. The appellant is also directed to cooperate with the adjudicating authority to ensure that the matter gets closed within four months from the date of this order.
8. The appeals stand disposed off by way of remand to the adjudicating authority.
(Dictated and pronounced in the open court)
