2015 (7) TMI 34 - AT - Service Tax

Cenvat credit on free service provided to customers - Held that - In this case the authorized service station is providing service on behalf of the appellant and appellant is required to pay the cost of service along with service tax to the authorized service station who has provided service on behalf of the appellant to the owner of the vehicle. Therefore, the service provided by authorized service station has become input service for the appellant and appellant is entitled to take cenvat credit. - Decided in favour of assessee.

Summary

Issues:
1. Denial of cenvat credit on service tax paid for free services provided by a service provider on behalf of the appellant.

Analysis:
The appellant, an authorized dealer of a vehicle manufacturer, was denied cenvat credit on service tax paid for free services provided by the service provider on behalf of the appellant. The dispute arose as the revenue argued that the appellant neither provided nor received any service, thus not eligible for cenvat credit based on the invoice. The appellant contended that the service provider offered free services to the buyer on behalf of the appellant, who is the registered dealer. The appellant claimed to be the service receiver and entitled to cenvat credit as the service was provided on their behalf.

The authorized service station provided services to the buyer of the vehicle, as per the sale policy requiring the appellant to offer three free services to the buyer. When the buyer availed services from the authorized service station without charge, it was considered that the service station acted on behalf of the appellant. The appellant was obligated to pay for the service, including service tax, to the service station, making the service an input service for the appellant. Consequently, the appellant was deemed eligible to claim cenvat credit on the service tax paid.

The tribunal held that the appellant rightfully availed the cenvat credit, overturning the impugned order. The appeal was allowed, providing the appellant with consequential relief.