2017 (6) TMI 975 - AT - Service Tax

CENVAT credit - interpretation of definition of input service - advertising for sale of cars - denial of credit on the ground that the vehicle gets totally serviced at the other service station and no further servicing was being done at the appellants premises - Held that - the issue is squarely covered in favour of the appellant in the case of M/s My Car (Pune) Pvt. Ltd. Versus CCE, Pune-I 2016 (1) TMI 1155 - CESTAT MUMBAI , where it was held that it is quite probable that the servicing may be delegated to another dealer. That it was performed elsewhere does not alter the factum of usage of another service-provider for supplying a service contracted to be provided to a recipient in which the recipient of service is not obliged to meet the costs. Such costs met by appellant are expenditure towards service procured to provide an output service - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against rejection of service tax credit on input services 'advertising for sale of cars' and 'renting paid towards showrooms', nexus requirement for availing CENVAT credit, interpretation of input service definition, applicability of judicial precedents, disagreement on service tax credit eligibility, reliance on binding judicial precedents.

The appeal in this case was directed against the order passed by the Commissioner(Appeals) rejecting the appellant's appeal. The appellant, registered for providing various services, availed CENVAT credit on input services related to the sale of cars and servicing activities. The issue arose when it was observed that the appellants were not registered under service tax and were not directly connected to the provision of the output service. The original authority confirmed the demand for wrongly availed CENVAT credit, leading to the appeal. The appellant argued that the impugned order misinterpreted the definition of input service and ignored binding judicial precedents. The appellant contended that the servicing activity rendered by them was a taxable output service, and they had been paying service tax on such activities by utilizing CENVAT credit. The appellant highlighted the wide interpretation of the statutory definition of input service and cited a previous Tribunal decision in their favor.

The appellant's counsel argued that the impugned order misinterpreted the definition of input service and ignored binding judicial precedents. The appellant contended that the servicing activity rendered by them was a taxable output service, and they had been paying service tax on such activities by utilizing CENVAT credit. The appellant highlighted the wide interpretation of the statutory definition of input service and cited a previous Tribunal decision in their favor. The appellant had an agreement with a motor company, allowing customers to choose servicing at the appellant's place or any other authorized dealer. The Tribunal's decision in a similar case supported the appellant's argument, emphasizing the usage of another service provider for supplying a service contracted to be provided to a recipient.

The Appellate Tribunal, after considering both sides' submissions and the materials on record, found that the issue was squarely covered in favor of the appellant by a previous Tribunal decision. The Tribunal held that the appellant, as a provider of output service, could delegate servicing to another dealer without affecting the usage of the service provider for supplying a service contracted to be provided to a recipient. The Tribunal noted that for a subsequent period, the Commissioner(Appeals) had allowed the CENVAT credit on the same service in question. Following the precedent and the subsequent decision, the Tribunal concluded that the impugned order was not sustainable and set it aside, allowing the appeal with consequential reliefs.

In conclusion, the Appellate Tribunal ruled in favor of the appellant, setting aside the impugned order that rejected the service tax credit on certain input services. The decision was based on the interpretation of the input service definition, nexus requirement, and the appellant's compliance with service tax regulations. The Tribunal's reliance on binding judicial precedents and the subsequent decision by the Commissioner(Appeals) supported the appellant's claim for CENVAT credit, ultimately leading to the allowance of the appeal with consequential reliefs.