2008 (3) TMI 163 - AT - Service Tax

Whether the service tax credits with regard to the Mobile Phones and repair and maintenance charges of Motor Vehicles qualify to be input service for the purpose of availment of service tax credit - credit of service tax paid on mobile phone is admissible - applicants have contended that the Motor Vehicles are provided to their officers and employees for use in carrying on the applicant s business, are eligible for credit there is force in the submissions of the applicants stay granted

Summary

Issues:
1. Disallowance of service tax credit
2. Clarification on input services for service tax credit

Analysis:

Issue 1: Disallowance of service tax credit
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise, Pune, upholding the disallowance of service tax credit of Rs. 3,38,161. The Commissioner reduced the penalty but confirmed the demand of interest. The applicants, engaged in manufacturing tractors and motor vehicle parts, contested the disallowance related to Mobile Phones and repair and maintenance charges of Motor Vehicles. The CBEC Circular clarified that service tax credit on mobile phones is admissible, supported by a previous Tribunal case. Regarding repair and maintenance charges, the applicants argued that these services are essential for their business operations, falling under the definition of 'input service' as per Cenvat Credit Rules. The Tribunal found merit in the applicants' contentions, granting a waiver of the pre-deposit amount demanded in the impugned order until the appeal's disposal.

Issue 2: Clarification on input services for service tax credit
The key issue revolved around determining whether the service tax credits for Mobile Phones and repair and maintenance charges of Motor Vehicles qualify as 'input services' for availing service tax credit under the Cenvat Credit Rules, 2004. The applicants provided detailed explanations on how these services were integral to their business processes, supporting their claim with relevant legal provisions and precedents. The Tribunal acknowledged the broad scope of 'input services' and found the applicants' arguments persuasive, leading to the decision to allow the waiver of the pre-deposit amount and stay the recovery until the appeal's final disposition. This judgment highlights the importance of a comprehensive understanding of input services in the context of service tax credit eligibility and the significance of legal precedents in supporting such claims.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai underscores the significance of legal interpretations, precedents, and the application of relevant laws in resolving disputes related to service tax credit disallowances and clarifications on input services.