2014 (9) TMI 852 - AT - Service Tax

Denial of CENVAT Credit - advertisement services and Banking & financial Services - Redemption fine - Held that - Documents satisfy the condition of Rule 9(2) of the Cenvat Credit Rules read with Rule 4A(i) of the Service Tax Rules, 1994, except minor clerical error. It is further evident from the show-cause notice that no opportunity was given to the appellant to remove the minor clerical error in the documents and accordingly, there is violation of principles of natural justice before disallowing the same. I hold that invoice of advertisement service and letter of the Bank as produced by the appellant in support of the input tax credit availed, does satisfy all the conditions and the input service credit is available to the appellant. - Decided in favour of assessee.

Issues:
1. Denial of CENVAT Credit for input services like advertisement services and Banking & financial Services.
2. Proper supporting documents for CENVAT Credit availed.
3. Interpretation of Rule 4A(i) of Service Tax Rules, 1994.
4. Admissibility of advertisement services as input service.
5. Compliance with Rule 9(2) of Cenvat Credit Rules and Rule 4A(i) of Service Tax Rules, 1994.

Analysis:

Issue 1: Denial of CENVAT Credit for input services like advertisement services and Banking & financial Services:
The appellant, a service station, appealed against the denial of CENVAT Credit for input services, including advertisement services and Banking & financial Services. The Order-in-Original disallowed the CENVAT Credit for these services due to lack of proper supporting documents as required by Rule 9 of the Cenvat Credit Rules. The Commissioner (Appeals) upheld the disallowance for Banking and Financial services due to defects in the documents. However, the Tribunal found that the documents presented by the appellant satisfied the conditions of Rule 9(2) of the Cenvat Credit Rules and Rule 4A(i) of the Service Tax Rules, except for a minor clerical error. The Tribunal held that the input service credit was available to the appellant, allowing the appeal in favor of the appellant.

Issue 2: Proper supporting documents for CENVAT Credit availed:
The appellant failed to provide proper supporting documents for the CENVAT Credit availed in respect of Banking Services and Advertisement Services, as required by Rule 9 of the Cenvat Credit Rules. The Commissioner (Appeals) upheld the disallowance based on this deficiency. However, the Tribunal noted that the documents submitted by the appellant did satisfy all the conditions of Rule 9(2) of the Cenvat Credit Rules and Rule 4A(i) of the Service Tax Rules, except for a minor clerical error. The Tribunal found a violation of principles of natural justice as the appellant was not given an opportunity to rectify the clerical error before disallowance.

Issue 3: Interpretation of Rule 4A(i) of Service Tax Rules, 1994:
The appellant argued that the documents presented, including a bank letter and advertisement agency bills, complied with Rule 4A(i) of the Service Tax Rules, 1994. The appellant contended that the relaxation provided under this rule should apply to their case. The Tribunal agreed with the appellant's interpretation, stating that the documents satisfied the conditions of the relevant rules, except for a clerical error, and thus allowed the appeal.

Issue 4: Admissibility of advertisement services as input service:
The Commissioner (Appeals) had held that advertisement services were not input services for the appellant's output service, leading to the disallowance of CENVAT Credit. However, the appellant argued that they had the right to decide whether to advertise their goods or services, and the Commissioner's reasoning was without basis. The Tribunal found the appellant's argument valid, stating that the decision to advertise is within the appellant's discretion, and thus, the advertisement services should be considered as input services.

Issue 5: Compliance with Rule 9(2) of Cenvat Credit Rules and Rule 4A(i) of Service Tax Rules, 1994:
The Tribunal emphasized the importance of complying with Rule 9(2) of the Cenvat Credit Rules and Rule 4A(i) of the Service Tax Rules, 1994, for availing CENVAT Credit. While the Revenue pointed out deficiencies in the documents, such as missing Service Tax Registration Numbers, the Tribunal found that the documents met the necessary conditions, except for a minor clerical error. The Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief as per the law.

This comprehensive analysis highlights the key issues addressed in the judgment, detailing the arguments presented by the parties and the Tribunal's findings on each matter, ultimately resulting in the allowance of the appeal in favor of the appellant.

← Previous Next →