2010 (12) TMI 100 - AT - Service Tax

Input services - cenvat credit - service tax paid on any service which was not taxable - The appellant had availed CENVAT credit on two input services, viz. (1) inspection and certification of pollution level; (2) operation and maintenance of sewage treatment plant. The authorities held that these services were not taxable services and, therefore, CENVAT credit of the service tax paid thereon was not admissible to the appellant - Held that - The ratio of the decision in Mahaveer Surfactants (P) Ltd. (2008 -TMI - 32123 - CESTAT CHENNAI), which relates to input-duty credit, is applicable to the present case. It is not in dispute that the services in question were tax-paid and were used as input services by the appellant. The appellant was very much within their right to claim CENVAT credit of such tax. The Revenue has no case that the services in question were not covered by the definition of input service under Rule 2(l) of the CENVAT Credit Rules. In this scenario, credit of the amount of service tax paid on these services by the service provider would be admissible to the appellant under Rule 3(1) of the CENVAT Credit Rules.

Summary

Issues: Denial of CENVAT credit on certain input services.

In this case, the appellant filed an appeal against the denial of CENVAT credit on two input services - inspection and certification of pollution level, and operation and maintenance of sewage treatment plant. The lower authorities held that since these services were not taxable, the appellant was not entitled to avail CENVAT credit on the service tax paid for these services. The appellant contested this decision by citing various precedents where similar issues were addressed. The Tribunal examined these precedents and found that the appellant was within their right to claim CENVAT credit on tax-paid services used as input services. The Tribunal noted that the services in question were indeed tax-paid and fell within the definition of input service under the CENVAT Credit Rules. Therefore, the Tribunal set aside the impugned order and allowed the appeal, stating that the appellant was entitled to claim CENVAT credit on the service tax paid for the input services in question.

The learned counsel for the appellant relied on several decisions to support their case, including Mahaveer Surfactants (P) Ltd., Koch-Glitsch India Ltd., Carborandum Universal Ltd., and Hindustan Coca Cola Beverages Pvt. Ltd. In these cases, similar issues regarding the admissibility of CENVAT credit on input services were addressed. The Tribunal in these cases allowed the appellants to claim CENVAT credit on the service tax paid for input services, rejecting the Revenue's arguments that the services were not taxable or that the tax was wrongly assessed. The Tribunal emphasized that as long as the services were tax-paid and used as input services, the appellants were entitled to claim CENVAT credit under the relevant rules. The Tribunal found that the present case was in line with the decisions cited by the appellant's counsel and concluded that the appellant was rightfully claiming CENVAT credit on the service tax paid for the input services in question.

The Tribunal considered the arguments presented by the learned JDR, who reiterated the findings of the original authority and the first appellate authority. After evaluating all submissions, the Tribunal found that the appellant's case aligned with the decisions cited by the appellant's counsel, particularly the precedent set by Mahaveer Surfactants (P) Ltd. The Tribunal emphasized that the services in question were tax-paid and qualified as input services under the CENVAT Credit Rules. Therefore, the Tribunal ruled in favor of the appellant, setting aside the previous order that denied CENVAT credit on the input services. The Tribunal allowed the appeal, stating that the appellant was entitled to claim CENVAT credit on the service tax paid for the input services, as per the relevant rules and precedents cited.