2026-VIL-954-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Availment of CENVAT credit on common input services when abatement is claimed – Appellant claimed abatement under Notification No. 1/2006-ST on certain taxable services while simultaneously availing CENVAT credit on common input services such as management consultancy, security, and equipment hire that were utilized for both abated and non-abated output services - Whether an assessee providing both taxable and exempted services can avail CENVAT credit on common input services specified under Rule 6(5) of the CCR, 2004 while simultaneously claiming abatement under Notification No. 1/2006-ST, when such common input services are not used exclusively for the exempted services but are utilized for multiple output services – HELD - The Rule 6(5) contains a non obstante clause which grants it overriding effect over conflicting provisions, and this rule permits credit of service tax paid on specified services so long as such services are not used exclusively for exempted services. The word "such" in the proviso to N/No. 1/2006-ST refers to input services used for providing the specific taxable service on which abatement is claimed and not a blanket prohibition on all CENVAT credit. The Rule must be read harmoniously with the notification, and since the common input services were utilized for both taxable and exempted output services and were not exclusively used for exempted services, the assessee qualifies for the credit - There is no one-to-one relationship between input and output in the CENVAT credit scheme and once credit is earned it can be denied only as per law - The assessee is entitled to avail CENVAT credit on common input services specified under Rule 6(5) of the CENVAT Credit Rules 2004 even while claiming abatement under Notification No. 1/2006-ST – The impugned order is set aside and the appeal is allowed
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