2018 (4) TMI 1337 - AT - Service Tax

CENVAT credit - various input services - denial on account of nexus - Held that - all the services used by the appellant are used in or in relation to providing the output service i.e. broadcasting and business auxiliary services - It is also observed that all these services have been held as input services in various judgments as cited by the appellant. As regards the charge that the registration number was wrongly mentioned in the input service invoices, we are of the view that merely for this error, substantial benefit of cenvat credit cannot be denied unless until it is proved that the services covered under the said discrepant invoices were not received by the appellant and not used for providing the output service which is not the case here. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit by the adjudicating authority based on lack of nexus between input services and output services.
- Mention of old registration number in some input invoices leading to denial of credit.

Analysis:
1. Denial of Cenvat Credit Based on Lack of Nexus:
The adjudicating authority denied cenvat credit to the appellant citing reasons such as the absence of a nexus between input services like advertising agency service, air travel service, business support services, telephone and mobile service, making blueprint and record keeping charges, health checkup, repair and maintenance, and bank charges with the output services of broadcasting and business auxiliary services. The appellant, represented by a learned Chartered Accountant, argued that all the disputed services were essential for the broadcasting business, and their expenses were absorbed in the value of the output service on which service tax was discharged. The appellant relied on various judgments where credit for similar services was allowed. The tribunal observed that the services in question were indeed used in or in relation to providing the output services, as evidenced by the nature and use of each service provided by the appellant.

2. Mention of Old Registration Number in Invoices:
Another ground for denial of cenvat credit was the mention of the old registration number of the service provider in some input invoices, despite the service provider having obtained a new registration. The appellant clarified that this discrepancy arose due to the service provider transitioning from a non-PAN based registration to a PAN-based registration. The tribunal noted that the services covered by these invoices were indeed received by the appellant and used for providing the output service. Therefore, the tribunal held that a clerical error in mentioning the wrong registration number should not be a reason to deny the substantial benefit of cenvat credit.

3. Decision and Conclusion:
After considering the submissions from both sides, the tribunal found that all the services for which cenvat credit was denied were indeed used in providing the output services of broadcasting and business auxiliary services. The tribunal also noted that similar services had been recognized as input services in various judgments cited by the appellant. Therefore, the tribunal concluded that the denial of cenvat credit was unjustified and set aside the impugned order, allowing the appeal in favor of the appellant. The tribunal emphasized that a minor mistake in mentioning the registration number should not result in the denial of cenvat credit when the services were actually utilized for the business operations.