2018 (8) TMI 691 – CESTAT NEW DELHI – TMI – CENVAT Credit – common input services used in trading activity – Department is of the view that the appellant have wrongly utilised Cenvat Credit of input services pertaining to services used in trading of automobile cars – Rule 6 (3a) of Cenvat Credit Rules, 2004.
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Held that:- It is a matter of record that the appellant has been engaged in trading of automobile cars along with servicing of the cars and other automobile from the same premises and they have availed Cenvat Credit of various common input services which has been utilised towards both taxable services as well as for trading activity – trading activity abinitio cannot be considered as a “service” because the trading in the cars only involves transfer of property on financial consideration from the appellant dealer to various buyers of automobile cars. The Cenvat Credit facility of input services is only available to the output services rendered by any assessee and thus the Ce
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services, and other financial services etc under the provisions of Cenvat Credit Rules, 2004 on the trading activity. The Department is of the view that the appellant have wrongly utilised Cenvat Credit of input services pertaining to services used in trading of automobile cars. Since the trading activity only covers the transfer of goods to the purchaser on payment of cash or any other valuable consideration and therefore such activity is only purely a sale activity and therefore cannot be considered as a service and thus same is beyond the scope of Finance Act, 1994 as well as the provisions of Cenvat Credit Rules, 2004. The Department in the show cause notice has also mentioned that since the respondent i.e. the appellant-assessee did not maintain separate accounts for input services used towards the trading activity (exempted activity) and that towards servicing of cars, therefore, the appellant are required to pay an amount of Cenvat Credits in terms of Rule 6 (3a) of Cenvat Credi
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f property on financial consideration from the appellant dealer to various buyers of automobile cars. The Cenvat Credit facility of input services is only available to the output services rendered by any assessee and thus the Cenvat Credit of input services used in Trading activity is not allowable as per Cenvat Credit Rules, 2004. 5. We have heard both sides. The matter is no longer res-integra and we rely upon the judgment in case of Hon ble Madras High Court in the case of Ruchika Global Interlinks V/s CESTAT, Chennai reported in 2017 (5) GSTL 225 (Mad.). The Hon ble High Court in the judgment cited (supra) has clearly been provided that:- 10.2 Clearly, both before and after amendment, exempted services meant those taxable services, which were exempt from whole of Service Tax and, included those services on which Service Tax was not leviable, under Section 66 of the Finance Act. The inclusion in Explanation to Rule 2(e) trading was, without doubt, only clarificatory. As accepted by
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