Case Law Details
Adani Energy Ltd Vs C.S.T. Service Tax (CESTAT Ahmedabad)
The Cenvat credit on input services was denied on the ground that the input services were also used in PNG Sale i.e. trading activity. Since the input services were not used for providing of output services, the Cenvat credit used in such activity was denied. We observe that during the relevant period Appellant carried out three activities: (i) Providing Services of transportation of natural gas through pipeline on which service tax is paid (ii) Manufactured CNG gas from natural gas received from M/s Gujarat State Petroleum Corporation Ltd. and paid appropriate central excise duty on the same (iii) Purchased PNG from M/s Gujrat State Petroleum Corporation Ltd and sold it to its customers i.e trading activity on which no service tax is paid. We find that as regard the trading activity specific amendment was made in the Cenvat Credit Rules, w.e.f. 1.4.2011 as per Notification No. 3/2011-C.E. (N.T.), dated 01.03.2011 wherein, the trading activity was incorporated in the definition of exempted services accordingly Rule (6) became applicable but it is only from 1.4.2011, prior to that there was no provision for either denial of credit or for reversal of the same. In this case, since the dispute is for the period of April 2006 to March 2007, the denial of Cenvat Credit not correct and legal. Clearly the position was clarified by the Government by insertion of Explanation only with effect from 1-4-2011 that the trading activity will be Exempted Services which cannot be given retrospective effect.
In view of the settled position of law as discussed above, we find no merit in the impugned order in so far it confirms the Cenvat demand against the appellant.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The appeal is directed against Order-in-Original No. STC/26/O&A/Commr/AHD/2008 dated 31.03.2009 passed by the Commissioner of Service tax, Ahmedabad, whereby the Learned Commissioner upheld the disallowance of Cenvat Credit of Rs. 64,99,642/-allegedly wrongly availed during the period April 2006 to March 2007, recovery in cash of Service tax credit of Rs. 21,99,492/- wrongly utilized during the period April 2006 to October 2006 and recovery of Rs. 7,22,203/-short paid in the month March 2007 along with interest under Section 75 of the Act. He also imposed penalty under Section 76 of the Finance Act and under Rule 15(3) of Cenvat Credit Rules 2004.
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