2015 (9) TMI 52 - AT - Service Tax

Denial of input tax credit - Credit on security guards, telephone connections installed at the residence of bank employees and professional charges for professional work - Held that - The amount of service tax on these services is wrongly availed as cenvat credit as per notification No. 23/04 as they have not used in or in relation to output services. On plain reading of the show cause notice, it is clear that fees paid to the consultant representative by the appellant has availed services of different consultants for each purpose. These observations in the Show cause notice can not be made without examining the invoice. Therefore, it is observed that before issuing the show cause notice, invoices for the fees paid to the consultant were with the department. If the authorities below could have asked the appellant to provide the copy of the invoices, the appellant could have provided when the appellant has enclosed all the copies of enclosed invoices along with their appeal papers. In these circumstances, as appellant had provided all the copies of invoices for the service provided by the consultants are on record, the appellant is entitled to take cenvat credit if same is in order as per the conditions of notification No. 23/04. Further, the security guard service and telephone connections services has been availed by their back up office where General Manager is also residing and the services availed for the security guards at residence of General Manager and back up office cannot be segregated, therefore, the appellant is entitled to take cenvat credit on these service also. - appellant has availed input service disputed in this case has been availed for providing output service. Therefore, appellant is entitled to take cenvat credit - Decided in favour of assessee.

Summary

Issues:
Denial of input service credit on security guards, telephone connections at bank employees' residences, and professional charges.

Analysis:

1. Background and Allegations:
The appellant, a banking company with an office in Japan and a back-up office in India, was denied input service credit on security guards, telephone connections, and professional charges. The denial was based on the allegation that the appellant wrongly availed cenvat credit on these services, leading to a demand for duty, interest, and penalty under an extended period of limitation.

2. Appellant's Arguments:
The appellant contended that they provided clarifications during the audit and informed about their intention to avail cenvat credit. They argued that security guards were necessary due to RBI guidelines, and professional fees were paid for various services. The lower authorities did not consider their contentions and denied credit without requesting invoices, which the appellant could have provided.

3. Revenue's Position:
The Revenue opposed the appellant's claims, stating that the appellant did not produce invoices for professional services, hindering the examination of services utilized. They argued that the appellant failed to follow Cenvat Credit Rules by not entering their back-up office under a registration certificate, thereby not entitled to credit.

4. Judgment and Findings:
The Tribunal observed that the show cause notice alleged wrongful availing of credit without examining invoices. As the appellant provided invoices during the appeal, they were entitled to credit if compliant with conditions. The security guard and telephone services at the back-up office were integral, making the appellant eligible for credit. Arguments on ISD registration were dismissed as beyond the notice scope, and cited case law was deemed irrelevant.

5. Conclusion:
The Tribunal found merit in the appellant's appeal, setting aside the impugned order and allowing the appeal with consequential relief. The judgment emphasized that input services were utilized for output services, justifying the appellant's entitlement to cenvat credit.

In summary, the judgment addressed the denial of input service credit on security guards, telephone connections, and professional charges, highlighting the importance of examining invoices, compliance with rules, and the nexus between input and output services for cenvat credit eligibility.