2016 (12) TMI 1516 - AT - Central Excise

CENVAT credit - advertisement service - denial on the ground that such service has no nexus with the output service provided by the appellant namely, authorized service station service - Held that - Since the service tax paid on the disputed service is in relation to the business activities of the appellant, in my view, cenvat credit cannot be denied on the ground that the same is not conforming to the definition of input service - appeal allowed - credit allowed - decided in favor of appellant.

Summary

Issues: Denial of cenvat credit on advertisement service

Analysis:
The dispute in the present case revolves around the denial of cenvat credit amounting to ?97,309/- on advertisement services claimed by the appellant. The Department's stance is that there is no nexus between the advertisement service and the output service provided by the appellant, which is the authorized service station service.

The appellant's representative argues that besides the authorized service station service, the appellant also offers business auxiliary services. The service tax related to the commission on these services is duly paid to the Government. It is contended that since the advertisement service is connected to the business auxiliary service provided by the appellant, it should be considered as an input service for cenvat credit purposes.

The Department's representative, on the other hand, maintains the position taken in the impugned order regarding the denial of cenvat credit.

Upon hearing both parties and examining the records, it is noted that the show cause notice and the impugned order emphasize that the advertisement services are related to promoting vehicles, creating public awareness about discounts/finance schemes, and are not linked to the authorized service station service provided by the appellant.

However, it is observed that neither the lower authorities addressed the appellant's activities in providing business auxiliary services, for which the advertisement expenses were incurred. As the issue of utilizing the disputed service tax for offering taxable output services, specifically business auxiliary services, was not adequately considered by the lower authorities, the conclusion is drawn that the services were indeed utilized for providing business auxiliary services. Consequently, as the service tax paid on the disputed service is connected to the business activities of the appellant, it is held that cenvat credit cannot be refused on the basis that it does not meet the definition of an input service. Therefore, the impugned order is found to lack merit, and the appeal is allowed in favor of the appellant.

The judgment is concluded with the pronouncement in the open court.