2017 (10) TMI 507 - AT - Service Tax

Insurance Auxiliary Service - input service credit - common registration - Revenue entertained a view that the input services issued by M/s. Allied Risk Management are not proper eligible inputs for the purpose of availment of credit - Held that - Both the service provider firms were the proprietary units of one Mr Amit Dhruva and were allotted one common registration Number by Service Tax department. It is in this scenario that both the units were using the same registration number and it is only subsequently, an objection was raised and a separate service tax registration number was allotted to M/s. Allied Risk Management - Otherwise it is not disputed on record that M/s. Allied Risk Management had paid the service tax which was collected by them from the appellants, who have utilized their services - appeal allowed - decided in favor of appellant.

Summary

Issues: Dispute over input service credit availed by appellant from two service providers with a common registration number.

Analysis:
1. Issue of Input Service Credit: The appellant, engaged in providing Insurance Auxiliary Service, availed input service credit from two service providers, M/s. Allied Risk Management and M/s. Amit Associates, both being proprietary concerns of Mr. Amit Dhruva. The dispute arose when the Revenue contended that the input services from M/s. Allied Risk Management were not eligible due to sharing a registration number with M/s. Amit Associates. A show cause notice was issued for denial of credit amounting to ?2,04,189 availed during April 2009 to September 2009.

2. Contentions of the Appellant: The appellant argued that both service providers were under the same proprietor, Mr. Amit Dhruva, and were initially allotted a common registration number by the Service Tax department. They further explained that both firms operated under the same PAN card, paid service tax, and filed returns under one service code number. It was only later that M/s. Allied Risk Management obtained a separate registration. The appellant contended that since M/s. Allied Risk Management had paid service tax under the common registration number without objection from the Revenue, they should not be denied credit.

3. Decision and Reasoning: The lower authorities rejected the appellant's plea, stating that the invoices from M/s. Allied Risk Management, under the shared registration number, were not valid for availing credit. However, the Tribunal found that both firms were indeed under the same proprietorship, had a common registration initially, and M/s. Allied Risk Management had paid service tax collected from the appellant. The Tribunal concluded that denying credit based on the shared registration number, especially when the Revenue had not objected earlier, was unjustified. Therefore, the impugned orders were set aside, and the appeal was allowed in favor of the appellant with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the common ownership of the service providers and the payment of service tax by M/s. Allied Risk Management. The decision highlighted the unjust nature of denying credit based on the shared registration number, especially when the Revenue had previously accepted the arrangement.