2017 (6) TMI 911 - AT - Service Tax

CENVAT credit - input services - AMC, courier, security, rent and office management services in connection with Chartered Accountant services - Department is of the view that M/s. DHS neither a provider of services such as courier, renting, office management, etc., (they are Chartered Accountants) nor are they registered as input service distributors according to service tax law. Hence, such CENVAT credit availed by the appellant is wrong - Held that - it is an admitted fact that the appellant have paid the service tax to DHS who in turn has paid the same to the service provider and it is also an admitted fact that the input services have suffered service tax and CENVAT credit can be taken by the appellant and the registration is not a mandatory requirement for claiming CENVAT credit. There is no suppression on the part of the appellant, as the appellants have been filing ST-3 returns for the entire impugned period, which has been admitted by both the authorities and they have disclosed all the facts in the ST-3 returns and therefore, the department is barred from going back and holding that the availment of CENVAT credit by the appellant as incorrect or illegal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of appeal and imposition of penalty under Section 78 of the Finance Act by Commissioner (A) invoking extended period of limitation.

Detailed Analysis:

Issue 1: Rejection of Appeal and Imposition of Penalty
The appellant, practicing Chartered Accountants, shared expenses with another occupant on a proportionate basis. The Department contended that the CENVAT credit availed by the appellant on shared expenses was wrong as the other occupant was not a service provider registered as an input service distributor. The Order-in-Original confirmed a demand with interest and penalty. The appellant argued that registration was not mandatory for availing CENVAT credit and relied on case laws to support their claim. They contended that the arrangement was cost-sharing, not liable to service tax. The appellant also argued that the demand was time-barred and penalties were not imposable. The AR supported the impugned order, while the appellant cited various decisions to counter the Department's claims.

Issue 2: Legality of Availing CENVAT Credit
The appellant maintained that the impugned services were input services, and they had paid service tax to the occupant who, in turn, paid it to the service provider. They argued that registration was not mandatory for claiming CENVAT credit, citing relevant judgments. The Tribunal found no suppression on the appellant's part, as they had disclosed all facts in their ST-3 returns for the entire period. The Tribunal held that the appellant had a bona fide belief regarding the service tax registration of the occupant and the legality of availing CENVAT credit. Consequently, the impugned order was set aside, and the appeal was allowed.

Conclusion:
The Tribunal ruled in favor of the appellant, setting aside the impugned order rejecting the appeal and imposing penalties. The appellant's arguments regarding the legality of availing CENVAT credit, absence of suppression, and bona fide belief were accepted, leading to the decision in their favor. The judgment highlighted the importance of proper disclosure in returns and the applicability of relevant case laws in determining the legality of CENVAT credit availed by the appellant.