2014 (11) TMI 795 - AT - Service Tax

Waiver of pre deposit - CENVAT Credit - consulting engineer service - Credit taken on strength of debit notes - Held that - debit notes are serially numbered and clearly show the amount of service tax paid thereunder along with other details like description, value of service, service tax registration number, the recipient and the signature of the authorised signatory. Further, it is seen that the Board vide circular No. 120/01/2010-ST dated 19/1/2010 in para 3.4 has observed that in case of incomplete invoice the department shall take a liberal view in view of the judicial pronouncements. there is no allegation that the service in respect of which impugned credit was taken was not received by the appellants. CESTAT in the case of CCE, Salem vs. Pallipalayam Spinners (P) Ltd. (2010 (9) TMI 951 - CESTAT CHENNAI) has held that credit is admissible on documents such as debit notes containing all the requisite particulars for the purpose of extending the credit. Similar view was held by CESTAT in the case of Pharmalab Process Equipments Pvt. Ltd. vs. CCE, Ahmedabad 2009 (4) TMI 142 - CESTAT AHMEDABAD and in the case of Gujarat Tea Processors and Packers Ltd. vs. CCE, Ahmedabad 2011 (9) TMI 248 - CESTAT, AHMEDABAD . Appellants have a prima facie made out a good case for complete waiver of pre-deposit. We accordingly waive the pre-deposit in full and stay recovery of the impugned service tax demand, interest and penalties during the penalty of the appeal - Stay granted.

Summary

Issues:
Disallowed Cenvat credit on debit notes for service tax paid on office premises rent.

Analysis:
The appellants filed an application with their appeal against the impugned Order disallowing Cenvat credit of Rs. 40,83,776 on debit notes issued by M/s. Usha Plast Packaging Pvt. Ltd. The disallowance was based on the ground that debit notes are not eligible documents for Cenvat credit as per Rule 9(1) of Cenvat Credit Rules, 2004. The credit pertained to service tax on office premises rent paid from 7.8.08 to 31.8.2010. The appellants argued that the debit notes contained all necessary information and cited a judgment in support. They presented sample copies of the debit notes to emphasize their point.

Upon review of the records and sample debit notes, it was observed that the debit notes were sequentially numbered and included details like service tax amount, description, value of service, service tax registration number, recipient, and authorized signatory's signature. Reference was made to a circular stating that in cases of incomplete invoices, a liberal view should be taken as per judicial pronouncements. The proviso to Rule 9(2) allowed for Cenvat credit if certain details were present, and there was no dispute regarding the receipt of services by the appellants. Previous CESTAT judgments supported the admissibility of credit based on documents like debit notes containing necessary particulars.

Consequently, it was held that the appellants had established a strong case for complete waiver of pre-deposit. Therefore, the pre-deposit was waived entirely, and the recovery of the disputed service tax, interest, and penalties was stayed during the pendency of the appeal.