The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai has allowed the appeals filed by Sify Technologies Ltd., setting aside the demand raised by the tax authorities in relation to reversal of CENVAT credit for the period April 2012 to March 2014.
The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that for the period under dispute, the credit attributable to exempted services had to be computed only with reference to common input service credit, rather than total CENVAT credit, thereby granting significant relief to the assessee.
The appeals were filed against a 2016 Order-in-Original passed by the Commissioner of the Large Taxpayer Unit (LTU), Chennai, which had demanded additional reversal of credit by treating the variable “P” in Rule 6(3A) of the CENVAT Credit Rules, 2004 as total credit instead of common credit.
The appellant, Sify Technologies is engaged in providing various taxable services and also engages in trading activities, resulting in both taxable and exempt outputs. The dispute centered on whether, for the relevant period, reversal under Rule 6(3A)(c)(iii) should be computed using total credit availed, as argued by the department, or only the common credit relating to both taxable and exempt services, as argued by the company.
Sify Technologies Ltd.
The adjudicating authority had held against Sify, leading to the demand.
The tribunal noted that although the concept of common credit was explicitly introduced only after an amendment made in April 2016, several judicial authorities had already clarified that the amended provision was clarificatory in nature and therefore applied retrospectively.
The Tribunal held that the variable ‘P’ for the tax periods under consideration would denote only common credit arising from input services used for both exempted and non-exempted outputs.”
Consequently, the demand raised against Sify was set aside, and the appeals were allowed in full.
Case Details
Case Title: M/s. Sify Technologies Ltd. Versus Commissioner of GST & Central Excise
Case No.: Service Tax Appeal Nos. 41366 & 41367 of 2016
Date: 31.10.2025
Counsel For Appellant: Natasha Jhaner, Chartered Accountant
Counsel For Respondent: Rajni Menon, Authorised Representative
Read More: Glitch in Auto-populated Figures of B2C in GSTR-9 When Amendments Are Made for Previous FY
