Kalpakaaru Projects Pvt Ltd Vs Principal Commissioner (CESTAT Delhi)
CESTAT Delhi held that in case common input services are used for providing both taxable and exempted services, proportionate amount of CENVAT credit must be reversed as per rule 6(3) of Cenvat Credit Rules, 2004. Accordingly, demand confirmed to that extent.
Facts- The appellant is holding service tax centralized registration during the relevant period to provide a variety of services such as interior decoration/designer services, architecture services, manpower recruitment/ supply agency services/ erection, commission and installation services/ business auxiliary service/ transport of goods by road/ goods transport agency service/ renting of immovable property service/ legal consultancy services/ work contract services.
After the implementation of GST, the appellant’s registration was converted into a GST registration. Thus, the Commissioner of Central Tax, Audit II had jurisdiction over the appellant. By letter dated 13.09.2017 the audit sought some records from the appellant and scrutinized them. It found that the appellant had short paid service tax duty wrong availment of payment for works contract service; short paid service tax under reverse charged mechanism due to wrong availment of abatement on works contract services received by it; failed to reverse the CENVAT credit under Rule 6(3) of CENVAT credit Rules, 2004 on common input services; and short paid service tax which was deduced after reconciliation of revenue shown in financial records with the ST-3 returns. Accordingly, a show cause notice proposed recovery of the service tax and CENVAT credit as above with interest and penalties which culminated in the issue of impugned order.
