2024-VIL-443-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax – Reversal of credit on trading activity – Utilisation of common input services used for both taxable and trading activities – Availment of Cenvat credit – Recovery of Cenvat credit for not having exercised option in writing before the jurisdictional officer, under Rule 6(3)(ii) of CCR, 2004 – Whether the Respondent-assessee is bound to pay an amount equal to 5%/6% of the value of the exempted services – HELD – Rule 6 of CCR, 2004 clearly establish that the taxpayer has been given an option to reverse the credit along with the interest when common credit is availed on inputs and input services on both dutiable and exempted goods/services - Since the credit was not to be availed at all on exempted goods/services, having availed an option is given to reverse the same along with interest. Therefore, when in the first place the appellant is not at all eligible to avail credit the question of whether utilised or not does not arise - Commissioner while allowing payment of proportionate credit as per Rule 6(3A), with regard to interest holds that interest is not liable to be paid since sufficient balance was available in their account. The Commissioner has failed to notice that Rule 6(3A) is only an option given to the appellant allowing reversal of credit at a later date only if it is paid along with interest – for availing the option of proportionate reversal of credit, appellant has to necessarily pay the interest as specified therein - Commissioner’s order with regard to setting aside confirmation of service tax demand is confirmed and the Revenue’s appeal with regard to demand of interest is upheld - the Revenue’s Appeal is allowed only to the extent of demand of interest
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