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2011 (1) TMI 685 - AT - Service TaxInput services - Cenvat credit - Rule 15(3) of the CENVAT Credit Rules 2004 (CCR) - air travel agents service management consultancy service goods transport agents service management consultancy service goods transport agents service maintenance & repair service car hiring ( rent-a-cab ) service telephone and mobile service courier service recovery agent s service rail travel agent s service warranty handling service authorised service station service AMC of photocopier machines club association service insurance service service tax paid on professional fees and packing expenses. It was proposed in the notices to disallow the credit to the assessee on the ground that the impugned services were not input services as defined in Rule 2(l) of the CENVAT Credit Rules 2004 and the credit taken by the assessee as a manufacture was irregular. On the issue of cenvat credit on (i) (Air Travel Agent s Service) sub-para (ii) (Rail Travel Agent s Service) sub-para (iii) (Car hiring/rent-a-cab service) and sub-para (iv) (Authorised Service Station Service) - matter remanded back for verification of evidences. Cenvat Credit in relation to (Management Consultancy Service) (Maintenance or Repair Service) (Recovery Agent s Service) (Insurance and Courier Service) and (Courier Service) two member bench have difference of opinion - matter referred to larger bench.
Issues Involved:
1. Jurisdiction of the Commissioner. 2. Admissibility of CENVAT credit on various input services. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner: The appellant argued that the Commissioner of Central Excise and Service Tax, Belgaum, lacked jurisdiction to adjudicate on the admissibility of CENVAT credit since the credit was distributed by the Head Office in Bangalore. The Tribunal noted that this legal question was not addressed in the impugned order and remanded the matter for the Commissioner to give a finding on this jurisdictional issue. 2. Admissibility of CENVAT Credit on Various Input Services: i. Air Travel Agent's Service: The credit was disallowed by the Commissioner due to insufficient evidence that the service was used for sales promotion. The Tribunal remanded the matter to allow the appellant to establish entitlement to credit with necessary evidence. ii. Rail Travel Agent's Service: Similar to the Air Travel Agent's Service, the credit was disallowed for lack of evidence. The Tribunal remanded this issue as well. iii. Car Hiring/Rent-a-Cab Service: The credit was disallowed due to insufficient evidence that the service was used for business purposes. The Tribunal remanded the issue for the appellant to provide necessary evidence. iv. Authorised Service Station's Service: The appellant claimed the service was used for vehicles involved in sales promotion. The Tribunal found that the appellant had not established this claim and remanded the issue for fresh consideration. v. Management Consultancy Service: The appellant claimed credit for consultancy services related to employee benefits and business activities. The Commissioner disallowed the credit, considering these services as welfare measures for employees. The Tribunal held that if these services were activities related to business, the appellant was entitled to credit and remanded the issue for reconsideration. vi. Maintenance or Repair Service: The appellant provided free maintenance services during the warranty period and charged services post-warranty. The Tribunal found that the services during the warranty period were similar to those in the Danke Products case, where credit was allowed. For post-warranty services, the Tribunal held that these were activities related to business and remanded the issue for fresh consideration. vii. Recovery Agent's Service: The Commissioner disallowed credit, arguing that the service was post-sale and not related to manufacture or clearance. The Tribunal noted that if the service could be categorized as "activities relating to business," the credit should be allowed and remanded the issue. viii. Insurance and Courier Service: The appellant claimed credit for insurance related to business premises, employees, and transportation, and for courier services used in business operations. The Tribunal found that these services qualified as activities related to business and allowed the credit. ix. Professional Fee Service: The Commissioner disallowed credit due to lack of evidence that the fees were for services listed as input services. The Tribunal remanded the issue for the appellant to provide necessary evidence. x. Annual Maintenance Contract of Photocopier Machines: The Commissioner disallowed credit, arguing that maintenance of office equipment was not covered under input services. The Tribunal, relying on the Parason Machinery case, allowed the credit. xi. Club Association Service: The Tribunal upheld the Commissioner's decision to disallow credit, finding that club membership was not an activity related to business. xii. Courier Service: The Commissioner disallowed credit, considering the service as post-removal activity. The Tribunal held that transportation of spares for maintenance was an activity related to business and allowed the credit. xiii. GTA Service: The Tribunal allowed credit for transportation from factory to depot. For transportation to customer's premises, the Tribunal allowed credit if the conditions in the CBEC Circular were met and remanded the issue for verification. xiv. Packing Expenses: The Tribunal found that if the packing was for spares used in maintenance or repair, it was an activity related to business and remanded the issue for verification. Penalties and Interest: The Tribunal set aside the penalties and remanded the issue of interest for fresh consideration. Separate Judgments: The Judicial Member concurred with the remand on certain services due to lack of evidence but disagreed on allowing credit for services under "activities relating to business" without establishing an integral connection with the manufacturing business. The Judicial Member emphasized the need for the appellant to establish this connection in line with the Ultratech Cement case. Points of Difference: (a) Whether to allow the appeal on certain services or remand for establishing an integral business connection. (b) Whether the appellant must show that the service relates to business or establish an integral connection with manufacturing. The matter was referred to the Hon'ble President for a decision by a Third Member.
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