2016 (10) TMI 1158 - AT - Central Excise

CENVAT credit - input service - sub-contract - services were rendered by other service providers appointed by the CHA - Held that - If these invoices issued by the service provider can be correlated and matched with the consolidated invoices issued by the CHA substantive benefit of input service credit cannot be denied to the appellant - matter remanded to the original adjudicating authority for the limited purpose of checking whether there is correlation between the invoices issued by the sub-contractors/service providers appointed by the CHA and the consolidated invoices issued by the CHA to the appellant - appeal allowed by way of remand.

Summary

Issues: Denial of input service tax credit based on services rendered by other service providers appointed by the CHA, payments made through CHA, and lack of evidence of CHA being a "pure agent" as per Service Tax Rules.

Analysis:
1. The issue at hand pertains to the denial of input service tax credit amounting to ?2,29,218/- due to services provided by service providers appointed by the CHA. The denial was upheld by the LAA on the basis that the payments were made via CHA, who was not considered a "pure agent" of the appellant as per Rule 5 of the Service Tax Rules, 2006. The appellant failed to provide evidence supporting the claim that CHAs acted as pure agents.

2. The appellant's counsel argued that all invoices, even if raised by sub-contractors (service providers to CHAs), mentioned the appellant's name directly or along with the CHA's name. It was highlighted that consolidated invoices from the CHA referenced the receipt of all bills and could be cross-referenced with invoices from sub-contractors.

3. The A.R representing the respondent contended that the lower appellate authority had thoroughly examined the issue and justified the denial of benefits.

4. After hearing both sides and reviewing the facts, it was acknowledged that while CHAs may not be pure agents for customs work as contracted, the invoices from service providers appointed by CHAs did mention the appellant's name directly or alongside the CHA's name. The crucial point was establishing correlation between invoices from sub-contractors and consolidated invoices from CHA to determine the eligibility for input service credit.

5. Consequently, the matter was remanded to the original adjudicating authority to verify the correlation between invoices from sub-contractors/service providers appointed by CHA and the consolidated invoices from CHA to ascertain the eligibility for input service credit. The appeal was disposed of with this direction for further examination.