53. [2014] 48 taxmann.com 6 (New Delhi – CESTAT) Amit Khanna vs. Commissioner of Central Excise, Bhopal.

Stay – Whether CENVAT Credit is allowed if benefit of small scale exemption under Notification 6/2005-ST is denied to assessee? Held, Yes.

Appellant provided taxable services of cable network. It took over another cable operator who was availing threshold limit exemption under Notification No. 6/2005-S.T. The department observed that the other cable operator was not eligible for exemption under Notification No. 6/2005 and therefore demanded service tax and consequential interest and penalties. At the time of application for waiver of pre-deposit and stay, appellant argued that even if it was liable for service tax for the period prior to take-over, it would be eligible to take credit of input service received from other multi-system operators in that period. Therefore, net service tax would be much lower. Accepting the submission, the Tribunal expressed a prima facie view that CENVAT Credit of input service can be taken in respect of years for which exemption under Notification No. 6/2005-S.T. was denied and service tax was demanded. Pre-deposit was accordingly ordered of reduced amount.