2016 (1) TMI 649 - AT - Service Tax

Credit on services not qualified as input services - Denial of credit on Professional Services, Medical Insurance and Car Insurance - credit on service tax paid on Professional Services have been denied for the reason that the invoices issued by the service provider are to the appellants office at Delhi, whereas the factory of the appellant is located at Faridabad - Held that - There is no dispute about the service availed or the tax paid. Merely because the invoices did not contain the address of factory at Faridabad, which is purely technical, the appellants cannot be denied the benefit provided under law. The issue has been decided in favour of the assessee in Bloom Dekor Ltd. v. CCE, Ahmedabad 2013 (2) TMI 301 - CESTAT, AHMEDABAD and National Engineering Industries Ltd. v. CCE, Jaipur (2013 (6) TMI 590 - CESTAT NEW DELHI ) in which cases, the facts are similar to the instant case. Applying the ratio of the above judgments appellants are entitled to credit of the tax on Professional Services. The credit on car Insurance and Medical Insurance were denied for the reason that they have no nexus with the activity of manufacture. During the relevant period the definition of input services had a very wide ambit covering all activities related to the business of manufacture. Therefore do not find any reason to disallow the above. - Decided in favour of assessee

Summary

Issues:
1. Denial of Cenvat credit on Professional Services, Medical Insurance, Car Insurance, and Freight Outward services.

Analysis:
1. The appellants, engaged in manufacturing various chemicals, were denied Cenvat credit on certain services by the impugned order. The Commissioner (Appeals) partially allowed their claim but denied credit on Professional Services, Medical Insurance, and Car Insurance. The denial was based on the location of the factory in Faridabad and the address on the invoices issued at Delhi. The appellants contended that these services were essential for their factory at Faridabad and were related to their manufacturing business. Citing relevant judgments, the appellants argued for the credit. The learned DR supported the impugned order.

2. The Tribunal examined the denial of credit on Professional Services, Car Insurance, and Medical Insurance. A sum of &8377;53,813/- was disallowed on these services. The denial of credit on Professional Services due to the address discrepancy between the factory and office was considered a technical issue. Relying on previous judgments with similar facts, the Tribunal held that the appellants should not be denied credit based solely on address mismatch. Regarding Car Insurance and Medical Insurance, the Tribunal noted that during the relevant period, the definition of input services had a broad scope encompassing all activities related to the manufacturing business. Consequently, there was no justification to disallow credit on these services.

3. Ultimately, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief if necessary. The decision was based on the understanding that the denial of credit on Professional Services was unjustified due to a mere technicality, and the broad definition of input services covered Car Insurance and Medical Insurance as well. The appellants were deemed entitled to the Cenvat credit on the disputed services, as established by the legal precedents and the interpretation of relevant laws.

Conclusion:
The Tribunal's judgment overturned the denial of Cenvat credit on Professional Services, Car Insurance, and Medical Insurance, emphasizing the importance of the services for the manufacturing business and the expansive definition of input services during the relevant period. The decision was in favor of the appellants, granting them the credit and providing relief from the impugned order.