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November 2014

2014 (35) STR 945 L & T Sargent & Lundy Ltd. vs. CCEx, Vadodara

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Export of service not to be regarded as exempt service for proportionate reversal of CENVAT Credit-Beneficial circular applicable retrospectively, while circular which creates liability or change has prospective effect.

Facts:
Appellant provided services locally as well as exported out of India. Service tax was charged on services provided in the country and services were exported without payment of service tax. The department was of the view that the CENVAT Credit utilisation has to be restricted to 20% on account of provision of exempted service namely export. The dispute pertained to the year 2007. Appellant argued that in the year 2008, CBEC had issued circular clarifying export of services would not be regarded as exempt services. However, department denied the benefit of circular stating the non-applicability for the period under dispute.

Held:
Tribunal held that Supreme Court has in Suchitra Components vs. CCE,, Guntur 2008 (11) STR 430 held that, a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively and therefore allowed the claim of the Appellant.

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