Learned Advocate submits that lower authorities have also taken into account the Service Tax availed on the capital goods whereas the restriction of 20% utilisation is only in respect of the input service credit. He draws my attention to two precedent decision of the Tribunal in the same appellants case being BSNL v. CCE&C [2009] 21 STT 127 (Bang.-Cestat) and BSNL v. CCE [Final Order No. A/265/2011, dated 28-3-2011]. It stands held in the said decision that the restriction to use 20% of the credit in case of non-maintenance of separate Cenvat accounts for taxable and exempted services is only in respect of inputs service credit. Matter stands remanded to the lower authorities for segregating said credit falling on the input services as also on capital goods and to decide the matter afresh.
Appellants have filed a writ petition against the stay order dated 13.10.2011 passed by the Tribunal and Hon’ble Madras High Court had dismissed the writ petition. As the order passed by the Tribunal is merged with the order passed by the Hon’ble High Court, hence the Tribunal has no power to modify the stay order dated 13.10.2011. Further, we note that the vide order dated 19.12.2011 has granted time to make deposit as per the stay order passed by the Tribunal by 30.01.2012 and the appellants had not complied with the directions of the Hon’ble Madras High Court. Therefore, the appeal is dismissed for non-compliance with the provisions of section 35 of the Central Excise Act.
Since a substantial amount has already been paid and regarding the balance amount also the appellant claims to have paid but does not have the evidence in view of the destruction of documents in flood, I consider that the appellant has made out a strong prima facie case for waiver of pre-deposit and grant of stay. Accordingly, the requirement of pre-deposit of service tax demanded with interest and penalty is waived and stay against recovery is granted during the pendency of appeal.
After the amendment of Rule 6 of CENVAT credit Rules, 2004 by Finance Act, 2010, in view of the provisions section 73 of Finance Act, 2010, when an assessee gave a calculation of credit attributable to the inputs used in the manufacture of exempted products, the only option available to Revenue was to either accept the calculation or say what is wrong with the calculation and give Revenue’s calculation with proper basis and ask the assessee to rebut Revenue’s calculation. It was no longer open to demand 10% of the price or 5% of the price as the case may be of the exempted products. Therefore, we feel that the order has not been passed properly. Therefore, after waiving the requirement of predeposit for hearing the appeal, we proceed to decide the appeal itself.
The Counsel for the appellant submits that for the purpose of calculation, Revenue is taking into account the entire receipts of the appellants whereas the taxable value should be taken after allowing abatement of 50% in terms of Notification No. 1/-90ST and once only taxable value is taken into account, the turnover is below the value as laid down in the small scale notification and they were eligible for exemption. The Assistant Commissioner set aside the show-cause notice but Revenue filed appeal and Commissioner (Appeals) has confirmed the demand.
Assessee procured mutual fund subscription for SKP Securities Ltd. and Eastern Financial Ltd. The applicants are not mutual fund distributors nor they are agents thereof. The applicants could not produce any evidence in this regard. Therefore, the case law in the case of P.N. Vijay Financial Services (P.) Ltd. (supra) us not applicable to their case. Accordingly, the benefits of Notification are also not available to them. The applicants also could not produce any evidence that they have received commission directly from mutual fund companies being a registered mutual fund distributors.
In the instant case, the expenditure in respect of CMC charges was incurred by the assessee in discharging its primary responsibility as a CHA. In view of the clear provisions of rule 5 of the Service-tax (Determination of value) Rules, 2006, the CMC charges are to be included in the assessable value of the taxable service provided by the assessee. As regards the issue of time bar, it was found that the assessee never disclosed the fact that CMC charges are recovered from its customers in the ST-3 returns in which the statutory returns were filed by the assessee, wherein there was a separate column in which the assessees had to show the reimbursable expenses. Therefore, there was no merit in contention of assessee in respect of time bar also.
The assessee was registered with the Central Excise Department on its own on 16-6-2005. It was a proprietorship concern and it was required to file the service tax returns quarterly, which it had been filing meticulously with the Department. However, due to non-understanding of the relevant provisions of law, there was some short-payment of service tax during the period from August 2005 to October, 2006. However, when the said short payment was brought to the assessee’s notice in November, 2006 by the Visiting Departmental Officers, the entire amount of service tax was paid.
In the case of Idea Mobile Communication Ltd. v. CCE&C [2011] 32 STT 262/12 taxmann.com 307 (SC), the Apex Court has confirmed the view taken by the High Court wherein it was held that a transaction of selling of SIM card to the subscriber is also a part of the ‘service’ rendered by the service provider to the subscriber. The contention of the assessee that the amount paid as sales tax be considered as sufficient compliance of section 35F of the Central Excise Act, read with section 83 of the Finance Act could not be accepted. As the Tribunal has no power to adjust such payments as the same is created under the special Act, i.e., Customs Act, Finance Act and Central Excise Act. Therefore, the Tribunal has no power to adjust the payment of sales tax against service tax. As discussed above, the assessee had failed to make out a case for 100 per cent waiver of pre-deposit.
Once the payment of service tax had been made by service provider to Treasury, assessee may not be denied the benefit of Cenvat credit, subject to appropriate examination of the allegation in the show-cause notice and proving use of the service in accordance with law. The original authority had to be satisfied that requirement of rule 9(5) of the Cenvat Credit Rules was fulfilled and service-tax paid was relating to input service that was ultimately used in manufacture of excisable goods. If he was satisfied that there was nexus, dependability, integrity, indispensability and inevitability, there may not be a difficulty to consider the claim of the assessee.
