2016 (5) TMI 889 - AT - Service Tax

Allowability of service tax credit - Input credit relates to cell phone service availed courier service as well as service of travel agent availed and telephone operator services - Held that - so far as services related to cell phone courier agency as well as telephone operator services are concerned it is quite possible as to the use of those services for the purpose of manufacturing and commercial activity of the appellant. Therefore CENVAT credit claimed in respect of service tax paid thereon are allowed. So far as travel agency service is concerned appellant has not at all the explained the reason as to where such service was utilized and for what purpose and whether in relation to manufacture or not. Therefore on this limited count the matter is remitted to the adjudicating authority to satisfy him with the evidence as to the use of such service in taxable service activity or manufacturing activity. - Appeals disposed of

Summary

Issues: Disallowance of service tax credit on cell phone service, courier service, travel agent service, and telephone charges.

In the judgment delivered by the Appellate Tribunal CESTAT CHENNAI, the appellant argued for the allowance of CENVAT credit on services like cell phone operator service, courier agency service, travel agency service, and telephone service provider, stating that these services were utilized in relation to both manufacturing and commercial activities. The Tribunal acknowledged the possibility of these services being used for such purposes and allowed the CENVAT credit claimed on service tax paid for cell phone, courier, and telephone operator services.

However, concerning the travel agency service, the appellant failed to provide sufficient explanation regarding its utilization and purpose, specifically whether it was related to manufacturing activity. As a result, the Tribunal remitted this particular issue back to the adjudicating authority for further examination. The authority was directed to seek evidence demonstrating the use of the travel agency service in taxable or manufacturing activities. A reasoned order was to be passed based on the evidence provided, and the appellant was granted a reasonable opportunity for a hearing in this regard.

Ultimately, both appeals were disposed of based on the above considerations, with the decision allowing CENVAT credit on certain services while requiring further clarification and evidence for the travel agency service before reaching a final determination.