Space Matrix Design Consultants Pvt. Ltd. Vs Commissioner of Central Tax (CESTAT Bangalore)
Summary: The present appeal was directed against the impugned order dated 01.11.2018 passed by the Commissioner (Appeals), who had upheld the Order-in-Original and rejected the appellant’s appeal.
The appellant was registered under Service Tax for Provider/Recipient of work contract, Design Services, Business Support Services etc., and was availing credit of service tax paid on input services under the Cenvat Credit Rules, 2004. During internal audit of its records for the period 01/2013 to 03/2017, the Department observed that the appellant was also engaged in purchase and redemption of various Mutual Fund Units.
The Department proceeded on the basis that trading in units of mutual funds was to be considered “trading in goods” falling under the negative list under Section 66D(e) of the Finance Act, 1994. Since such activity was not liable to service tax under Section 66B of the Finance Act, 1994, it was treated as an “exempted service” under Rule 2(e) of the Cenvat Credit Rules, 2004.
On that basis, the Department alleged that the appellant had availed and utilised credit of service tax paid on input services used for both taxable and exempted services, without maintaining separate accounts under Rule 6(2), or making the payment contemplated under Rule 6(3)(i) or Rule 6(3)(ii) of the Cenvat Credit Rules, 2004.
