2015 (4) TMI 782 - AT - Service Tax

Availment of CENVAT Credit - Input Service Distributor - Availment of credit on invoices pertaining to others - Held that - Regulatory measure of registration is one of the essential condition for input service distribution to prevent wrongful claim of Cenvat credit by a third party in respect of the invoices issued by the service provider in the name of another Unit of the appellant. Prima facie , no substantial evidence was led by appellant to demonstrate integral connection between the services provided and job working. Similarly, invoices which were used as a basis for claiming Cenvat credit remained in doubt as to multiple claim thereon. Prima facie , when the genuinety of the claim became doubtful, it would not be possible to extend any benefit to the appellant, at this stage, but to direct pre-deposit to protect interest of Revenue. Material fact of invoices without name of the appellant does not rule out abuse of law. Appellant was claiming to be beneficiary of service tax paid by a concern other than the appellant. That crippled the appellant at this stage to advance its claim to Cenvat credit. Therefore, appellant is directed to deposit ₹ 4 crores (Rupees Four Crores only) in three instalments. - Decided against assessee.

Summary

Issues involved: Denial of Cenvat credit on certain services due to lack of invoices in the name of the appellant, dispute over Input Service Distributor (ISD) status, registration requirements, genuineness of invoices, and pre-deposit order.

Analysis:

1. The appellant availed Cenvat credit on certain services without invoices in their name, leading to a denial of credit amounting to Rs. 19,96,13,222, along with penalties and interest. The Adjudicating authority highlighted the absence of the appellant's name on the invoices, which mentioned units in different locations. The appellant was not registered under the Finance Act, 1994 until 2011, raising concerns about the legitimacy of the credit claimed.

2. The appellant argued that the services were used in manufacturing by job workers and goods were cleared on a job work basis. However, the Department contended that the appellant was not an Input Service Distributor (ISD), making it impermissible to claim credit on services not directly related to them. The appellant was directed to provide documents for verification to resolve the dispute, emphasizing the need for compliance with pre-deposit orders.

3. The Tribunal considered a similar case involving registration of Input Service Providers and emphasized the importance of registration for claiming Cenvat credit. The Revenue argued that the appellant had no connection to the services invoiced to different units and lacked registration as an ISD. The genuineness of invoices was questioned, and the absence of a clear link between job work manufacturing and service tax credit raised doubts about compliance with the law.

4. After hearing both sides, the Tribunal acknowledged the Revenue's concerns regarding the lack of substantial evidence supporting the appellant's claim. The appellant's reliance on invoices not in their name raised doubts about the legitimacy of the credit claimed. To protect the Revenue's interests, the Tribunal directed the appellant to deposit Rs. 4 crores in three installments, failing which the order would be vacated, allowing the Revenue to recover dues.

5. The Tribunal stressed the need for compliance with the deposit order and instructed the appellant to produce proof of payment to the Adjudicating Authority. Failure to comply would result in the Tribunal being informed. The appellant was required to make full compliance by a specified date, failing which consequences would follow. The stay application was disposed of based on the above terms, with a compliance deadline set for the appellant.