Order Date – 15 June 2023

Parties: M/s. Sify Technologies Limited Vs The Commissioner of Central Excise & Service Tax

Facts – 

• The Appellant, M/s. Sify Technologies Limited was engaged in providing erection, commissioning and installation to their customers in the form of establishing enterprise networking. They were also providing end-to-end network services, security services, hosting and application services to large organizations. The appellant was also selling bought-out goods which were used in connecting the system into network connection and data transfer to their end customers.
• A show cause notice was issued alleging that the appellant was availing input Service Tax credit on various services which were common services for both taxable services as well as traded goods for which no separate books were maintained.

Issue – 

• Whether the appellant has wrongly availed input service tax cedit?

Order –

• The Tribunal observed that from the findings of the Commissioner in the impugned order, the proposed demand in the Show Cause Notice did not have any legal sanctity as the same, apparently, was not as per the law as prevalent during the period in dispute.
• There is also an admission as to the appellant maintaining separate accounts at paragraph 13.1 of the impugned order, but however, for something happened in the earlier years, for which the adjudicating authority is clearly functus officio, he concludes to hold that the appellant is not maintaining separate books of accounts for taxable and exempted services.
• Thus, it was held that the authority should have gone strictly by the facts and documents as available, since it is well understood that each year is independent and the facts may vary. Hence, conclusion of not maintaining separate accounts is a baseless allegation made without proper application of mind.
• In the rulings of the Ahmedabad and Mumbai CESTAT Benches wherein it was held that CENVAT Credit could not be availed on trading activity and that portion of credit attributable to trading had to be reversed. This again is passed without proper application of mind to the pleadings of the appellant.
• Hence the demands are not sustainable and the appeal is allowed.