2016 (8) TMI 627 - AT - Service Tax

Cenvat credit - management consultancy service and consulting engineering service provided by the Directors to their own company i.e. appellant - Whether the appellant has availed CENVAT credit on the basis of proper evidence for payment of tax - no evidence available before the authority to satisfy that the service provider was as mentioned in the invoice - Held that - it appears that the transactions were between related persons. In absence of evidence, authorities could not appreciate the claim of the appellant. The appellate authority in his order has examined what that was the substance of the transaction. Also he has recorded that the service provider in this case was the Directors of the company and they were paid. Appellant could not satisfy what was the ability of the Directors to provide the questioned service. Neither their technical qualification was brought to record nor the scope and ambit of the service provided is visible therefrom. The only contention of appellant was that three services were provided by the directors of the company. Therefore, in absence of proper evidence on record to satisfy aforesaid requirement and the appellant not having come out with clean hands, it is difficult to entertain the appeal on merit. - Decided against the appellant

Summary

Issues:
1. Appellant seeking time for evidence and tax deposit verification.
2. Availment of CENVAT credit based on evidence.
3. Discrepancy in invoice particulars and related party transactions.

Analysis:
1. The appellant repeatedly sought time to present evidence regarding the provision of consulting engineering services and the deposit of taxes. However, on the day of the hearing, the appellant was absent, with the counsel reportedly at the High Court without any supporting evidence. This lack of evidence hindered the proceedings.

2. The core issue examined by the lower authority was whether the appellant had legitimately claimed CENVAT credit based on proper evidence of tax payment. The authorities found discrepancies in the invoice particulars related to the services provided, which were "management consultancy service and consulting engineering service" by the Directors to their own company, indicating transactions between related parties. The appellant failed to provide sufficient evidence regarding the service provider's qualifications or the nature of services rendered, leading to a lack of credibility in their claim.

3. Due to the absence of compelling evidence to support the appellant's claims and the failure to meet the necessary requirements, the appeal was dismissed for lacking merit. The appellant's inability to substantiate the transactions and the related party nature of the services provided contributed to the decision to reject the appeal.

This judgment underscores the importance of providing clear and verifiable evidence to support claims in tax-related matters, especially when dealing with transactions involving related parties. The lack of transparency and failure to present convincing evidence can significantly impact the outcome of an appeal, as demonstrated in this case.