2019 (1) TMI 510 - AT - Service Tax

CENVAT Credit - unregistered premises taken on rent - trading of goods - reversal of proportionate cenvat credit attributable to trading of goods in view of Rule 6(3) of the Cenvat Credit Rules 2004 - Held that - The assessee had not submitted any documentary evidence to support the claim that premises no. 67 is not used for providing exempted services or manufacturing activities and ultimately he confirmed the reversal of proportionate credit as demanded in the show-cause. If this is the finding of the adjudicating authority, it is not understood as to how, he being the same person in position passed another order just two days before on 23.08.2016 stating that renting of premises at unit no. 67 has no nexus with the output service which is provided by the assessee from unit no. 65. Admittedly, appellant has reversed the credit basing on Rule 6(3) of Cenvat Credit Rules in proportion to its dutiable and exempted services. This being the factual position and the documents on record, it cannot be said that appellant is to be penalised twice by invoking alternate provisions of the statute - In the instant case, appellant s premises appears to be one and same having different room numbers as throughout the case record, room number and premises number are used interchangeably - availment of cenvat credit against renting of premises number 67 is admissible. Appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of cenvat credit on service tax paid against unregistered premises taken on rent.

The appellant, a Private Ltd. Company, availed cenvat credit on service tax paid for renting premises no. 67 at Atlanta, Nariman Point, Mumbai, and premises no. 65. However, input credit against premises no. 67 was refused as it was unregistered. The appellant argued that registration of all premises is not mandatory unless it is a branch outside the Head office. The appellant also highlighted that the department itself asked for reversal of cenvat credit for trading goods, which should have implications on the renting of premises. The appellant cited judicial decisions and previous tribunal orders to support the admissibility of the credit against renting unregistered premises.

The department, represented by the ld. AR, supported the Commissioner (Appeals)'s decision, citing Rule 4(2) of the Service Tax Rules, 1994, which mandates the registration of business premises. The department argued that since the premises were not registered and were used as a back office, the cenvat credit for renting such premises is inadmissible. The department sought no interference in the Commissioner (Appeals)'s decision.

After hearing both sides and examining the orders-in-original and judicial decisions submitted, the Tribunal noted discrepancies in the adjudicating authority's findings. The authority confirmed the reversal of credit under Rule 6(3)(1) for dutiable and exempted services, but also stated that renting premises at unit no. 67 had no nexus with the output service provided from unit no. 65. The Tribunal found it unjust to penalize the appellant twice by invoking alternate provisions of the statute. It noted that Rule 4(2) of the Service Tax Rules does not explicitly state that cenvat credit is inadmissible without registration, except for Input Service Distributors (ISD). The Tribunal observed that the appellant's premises seemed to be the same, with different room numbers used interchangeably. Relying on a judicial precedent that found the subsequent period's cenvat credit against renting premises no. 67 admissible, the Tribunal allowed the appeal and set aside the Commissioner (Appeals)'s order.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s decision to deny cenvat credit on service tax paid for renting unregistered premises, based on the lack of nexus with the output service provided by the appellant.