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2015 (8) TMI 818 - AT - Service TaxCENVAT Credit - input service provided by the distributors of SIM cards - Telecommunication Service - Nexus with output service - Held that - Moreover, it is a fact that only when SIM card is available, the service provider can provide cellular phone service and receiver can avail the same. What is required to be considered in this case is whether the service rendered by the service provider to the appellant is having nexus with output service and has been used for output service or not. It cannot be a case of anybody that the SIM cards sold by the distributors or distributed by the distributors or service has not been used for providing output service namely, telecom service. In these circumstances, the decision in the case of Cadila Healthcare Ltd. (2013 (1) TMI 304 - GUJARAT HIGH COURT) may not be applicable to the present case since in that case, the Hon ble High Court has observed that commission agent was not promoting the sales and there was no evidence to that effect. Moreover, the facts are also not comparable since here what is required to be examined is whether input service has been used for providing output service or not which, in our opinion, has been used. Issue as to whether the appellant is eligible for Cenvat credit on input service provided by the distributors of SIM cards is held as admissible in favour of the appellant. As regards the documents/invoices, the matter is remanded to the original adjudicating authority - Decided in favour of assessee.
Issues involved:
1. Admissibility of Cenvat credit on input services provided by distributors of SIM cards. 2. Nexus between the services provided by distributors and the output service of telecom service. 3. Availability of invoices for Cenvat credit verification. Analysis: Issue 1: Admissibility of Cenvat credit on input services The Appellate Tribunal considered the case where the appellant, engaged in providing cellular phone service, availed Cenvat credit for service tax paid by distributors of SIM cards. The department contended that the credit was not admissible due to lack of nexus between distributor services and the output telecom service. The Commissioner relied on a previous case to support this view. However, the appellant argued that SIM cards were integral to the service provided, citing a Supreme Court decision. The Tribunal disagreed with the Commissioner, emphasizing the importance of SIM cards in providing cellular phone service. It concluded that the input service was indeed used for the output service, distinguishing the case from the precedent cited by the Commissioner. Issue 2: Nexus between distributor services and telecom service The Tribunal analyzed the connection between the services rendered by SIM card distributors and the appellant's telecom service. It highlighted that SIM cards were essential for providing cellular phone service and that the distributor services were utilized for the output service. The Tribunal rejected the argument that there was no nexus between the distributor services and the telecom service, emphasizing the necessity of SIM cards for the provision of the service. It differentiated the case from the precedent cited by the Commissioner, noting the distinct circumstances and the clear link between input and output services in the present case. Issue 3: Availability of invoices for Cenvat credit verification Regarding the availability of invoices for Cenvat credit verification, the appellant assured that all invoices had been provided and expressed willingness to have the matter remanded for invoice verification. The Tribunal acknowledged this submission and decided to remand the issue of documents/invoices to the original adjudicating authority for verification. The appellant was directed to produce the necessary invoices for verification, and if found in order, the credit would be allowed. The appeal was disposed of with these directions, ensuring proper verification of invoices for Cenvat credit. In conclusion, the Appellate Tribunal ruled in favor of the appellant, holding that the Cenvat credit on input services provided by distributors of SIM cards was admissible. The Tribunal emphasized the nexus between distributor services and the output telecom service, directing verification of invoices for credit approval.
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