C I Automotors Pvt. Ltd vs C.C.E.&S.T., Bhopal

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No.ST/55590/2014-ST[SM]

[Arising out of Order-in-Original No.BPL-EXCUS-000-APP-245-13-14, dated 21.02.2014 passed by C.C.E.&S.T.(Appeals), Bhopal]

C I Automotors Pvt. Ltd. Appellants

Vs.

C.C.E.&S.T., Bhopal Respondents

Appearance

Shri Arvind Kumar Tiwari, Rep - for the appellants

Shri BB Sharma, DR - for the respondents

CORAM: Honble Mr. R.K. Singh, Member (Technical)

Final Order No.50548/2015, dated 25.02.2015

Per Shri R.K. Singh :

The issue involved in this case is that the appellants are authorised service station and dealer of TVS Motors Ltd. They had taken CENVAT credit on various services like, Security Agency service, Telephone service, Insurance service, Renting of Immovable Property service, Banking and Financial service, Management, Maintenance and Repair service, GTA services and Courier service. They provide output service in the form of repair of vehicles as well as some banking and financial services. Revenue disallowed the impugned amount of service tax (Rs.3,09,000/-) ordering its recovery with interest and imposed penalties on the ground that this amount of CENVAT credit was in relation to the trading activity of the appellant which being an exempted service, the input credit relating thereto was not admissible. The period involved is 01.04.2005 to 31.03.2010.

2. The appellants have contended that it was only from 01.04.2011 that an explanation was added to Section 65 (105) (zo) of Finance Act, 1994 to the effect that trading was an exempted service. They also state that CENVAT credit in relation to services like Security Agency, Telephone, Courier, MMR, Banking and Financial services was available in full even if they had been used for providing taxable as well as for exempted services in terms of Rule 6(5) of CENVAT Credit Rules, 2004, which was omitted only with effect from 01.04.2011. There was an audit of their unit in 2007-08 and there was no suppression or mis-statement on their part. They cited CESTAT judgement in the case of CCE, Tirupathi Vs. Shariff Motors [2009 (3) TMI 155  CESTAT, Bangalore], wherein the input service credit in respect of GTA utilised for transportation of motor vehicles from factory to show room was allowed on the ground that the vehicles have been transported to their show room and unless vehicles are received and sold, there would not be any servicing of the same and that Revenue has taken a very narrow view. Based on the ratio of this judgement even the impugned services would qualify for input service credit.

3. Revenue on the other hand contended that in the CESTAT judgement in the case of Orion Appliances Ltd. Vs. CST, Ahmedabad [2010 (19) STR 205 (Tri.  Ahmd.)], it has been held that credit in respect of services utilised towards trading activity is not admissible. Ld. Departmental Representative contends that the judgement in the case of Tribhuvan Motors Ltd. Vs, CST, Mangalore [2010 (17) STR 281] has been distinguished by Larger Bench decision of CESTAT in the case of M/s. Pagariya Auto Centre Vs.CCE, Aurangabad [M/35/14/SMB/LB/C-IV, dated 12.09.2013

4. Heard both sides. Having regard to the facts that an Explanation was added to Section 65(105) (zo) ibid with effect from 01.04.2011 to clarify that trading is an exempted service and in view of the differing views of CESTAT as evident from the judgements cited above, it can be safely concluded that there was a clear scope for genuine confusion in the matter. Ld. Departmental Representative contends that if there was indeed a bona fide belief on the part of the appellants, they would have mentioned the trading activities in ST-3 returns under exempted category but that trading is an exempted service was clarified by an amendment to the Act only with effect from 01.04.2011. Further, several of the services in respect of which the credit is sought to be denied were those covered under sub-Rule (5) of Rule 6 of CENVAT Credit Rules. In these circumstances, the appellants have been able to make out a case that the extended period is not invokable. I find that the period involved in this case is 01.04.2005 to 31.03.2010 and the Show Cause Notice was issued on 16.05.2011. Thus, it is evident that no part of the impugned demand is within the normal period of one year with reference to the date of issue of Show Cause Notice and therefore I hold the demand to be time barred. Accordingly, the impugned order is set aside and the appeal allowed.

(R.K. Singh)

Member (Technical)

SSK

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