2018 (5) TMI 1120 - AT - Service Tax

CENVAT credit - denial on the ground that such grant availed on input services were distributed by the corporate office without taking out ISD registration and also on the ground of nexus - Held that - In the case in hand, there is no dispute that the CENVAT Credit which has been availed by Chennai corporate office is the amount of service tax paid by the service providers and the said tax is not distributed to any other unit of the appellant - Hon ble High Court of Gujarat in COMMISSIONER OF CENTRAL EXCISE Versus DASHION LTD 2016 (2) TMI 183 - GUJARAT HIGH COURT rejected the contention and held that credit is not deniable as non-registration of ISD is only a procedural irregularity - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of CENVAT Credit to appellant's Chennai Unit due to distribution by corporate office without ISD registration.
2. Eligibility to avail CENVAT Credit on documents addressed to corporate office.
3. Precedents related to eligibility of CENVAT Credit before ISD registration.
4. Interpretation of law regarding distribution of credit before ISD registration.

Analysis:
The appeal was against an order denying CENVAT Credit to the appellant's Chennai Unit as the credit was distributed by the corporate office without ISD registration. The issue revolved around the nexus of services on which service tax credit was availed. The learned C.A. argued that the credit could be distributed through ISD, and the matter could be resolved on this basis alone.

The Tribunal referred to past cases like Inox Air Products Ltd and Greaves Cotton Ltd, where similar issues were decided in favor of the appellants. It was noted that CENVAT Credit was availed on input services by the corporate office before ISD registration, which was also upheld in the case of Doshion Ltd. The Hon'ble High Court of Gujarat had ruled that non-registration of ISD is a procedural irregularity and does not deny credit. The appellant's Chennai corporate office had availed CENVAT Credit on service tax paid by service providers, which was not distributed to other units. The Circular No. 1063/2/2018-CX dated 16th February, 2018, supported this interpretation.

Based on the above analysis, the impugned order was set aside, and the appeal was allowed. The judgment highlighted the importance of ISD registration and the legality of distributing credit before such registration.