CESTAT decision in the case of Orion Appliances Ltd Vs. CST, Ahmedabad (2010-TIOL-752-CESTAT?
AHM)
Brief Facts:- Orion Appliances Ltd (hereinafter referred to as the „appellant?) was engaged in providing maintenance and repair and commissioning and installation services. The appellant was also engaged in trading activities. The appellant availed CENVAT credit of service tax paid on various input services including advertising, security, courier, telephone and banking services which were used in provision of taxable output services as well as for trading activities.
The appellant utilised the entire credit of service tax on such input services against it?s service tax liability on output services. The revenue contended that the appellant had not kept separate records for CENVAT credit attributable to taxable and exempt services and therefore had availed and utilised excess credit than permitted in terms of Rule 6(3) of the erstwhile CENVAT Credit Rules, 2004 and Rule 3(5) of the erstwhile Service Tax Credit Rules, 2002 since the services were not entirely used for providing taxable output services and such excess credit was therefore liable to reversal as per the Rule 6(3) and Rule 3(5) ibid.
Contentions of the Appellant
The appellant contended that trading activity in not an exempted service and thus Rule 6(2) of the CENVAT Credit Rules, 2004 („Rule 6(2)?) and Rule 3(4) of the erstwhile Service Tax Credit Rules, 2002 („Rule 3(4)?) requiring maintenance of separate records are not applicable. As per Rule 6(2) and Rule 3(4) an assessee is required to maintain separate records only in case of provision of taxable and exempted services. As the activity of trading cannot be considered as a service, the question of maintenance of separate set of accounts does not arise.
Contentions of the Respondent
The respondent while stating that the appellant had utilised excess credit contended the following –
