2014 (1) TMI 671 - AT - Service Tax

Waiver of pre-deposit - Stay of recovery - Denial of CENVAT Credit - Credit taken on reimbursable expenses - Whether the services rendered by M/s. GHL to the appellant could be considered as input services within the ambit of the definition under Rule 2(l) of the CCR 2004 - Held that - documents on the basis of which the credit in question was taken are styled as invoices but these documents do not show the description of the services. They merely mention the amount of expenses reimbursed during the period specified therein and the service tax paid thereon. However in the annexures to the so-called invoices the particulars of the expenses are seen stated. On a perusal of such particulars we find that M/s. GHL appear to have paid service tax on a variety of items such as freight handling charges postage and telephone charges rent & lighting conference expenses commission and discount staff welfare CFA expenses CFA rent CFA remuneration salaries & bonus etc - question has to be examined afresh by the learned Commissioner and in that process the finer question regarding the essentiality of the aforesaid expenses for the rendering of BAS also will have to be addressed by way of a closer scrutiny of the annexures to the so-called invoices - Decided in favour of assessee.

Issues:
1. Denial of CENVAT credit for specific periods.
2. Validity of documents for claiming credit.
3. Nature of services provided by M/s. GHL.
4. Interpretation of input services under Rule 2(l) of CCR, 2004.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for denied CENVAT credit amounts for two periods. The denial was based on services not meeting Rule 2(l) of CENVAT Credit Rules and invalid documents used for credit. The appellant argued that credit was taken on service tax paid by M/s. GHL on reimbursable expenses for Business Auxiliary Services (BAS). Documents provided showed service tax payments by M/s. GHL. The appellant contended that denial based on invalid documents was unsustainable. The appellant claimed that sales promotion falls under input services, disputing the authority's view. The Additional Commissioner argued that M/s. GHL acted as Input Service Distributor. The Tribunal noted the lack of service description in the documents and remanded the case for a fresh examination by the Commissioner to determine if the expenses were integral to BAS provision, requiring a closer scrutiny of the annexures to the invoices.

2. The denial of CENVAT credit was primarily due to services not meeting input service criteria and using documents that did not meet Rule 9 requirements. The documents provided lacked service descriptions, only mentioning expenses reimbursed and service tax paid. The Tribunal highlighted the need to assess if the expenses incurred by M/s. GHL and reimbursed by the appellant were essential for BAS provision. The Tribunal emphasized the importance of examining the nature of services claimed for CENVAT credit, indicating a need for a detailed review by the Commissioner based on the documents presented by the appellant.

3. The nature of services provided by M/s. GHL was a crucial aspect in determining the eligibility for CENVAT credit. The appellant argued that the expenses reimbursed were related to BAS provision, while the Additional Commissioner contended that M/s. GHL acted as a service recipient, not a provider. The Tribunal emphasized the need to establish the link between the expenses incurred by M/s. GHL and their relevance to the provision of BAS to the appellant. The case was remanded for a fresh assessment to determine if the services rendered could be considered as input services under Rule 2(l) of CCR, 2004.

4. The interpretation of input services under Rule 2(l) of CCR, 2004 was a key issue in the judgment. The appellant argued that sales promotion falls under input services, challenging the authority's view. The Tribunal highlighted the need for a detailed examination of whether the expenses incurred and reimbursed were essential for providing BAS. The case was remanded for a thorough review by the Commissioner to determine the admissibility of the expenses in relation to the BAS provision, emphasizing the need for a comprehensive analysis of the nature of services claimed for CENVAT credit eligibility.

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