2019 (2) TMI 584 - AT - Service Tax

CENVAT Credit - various input services - denial on account of nexus - Held that - In respect of these services, the appellant has placed reliance upon various decisions in which each service is squarely held as input service - More over the nature of service received and its use also show that the stand taken by the Revenue that there is no nexus between the input services and the output service is not correct. Credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order disallowing CENVAT credit on input services and imposing penalty under Rule 15 of CENVAT Credit Rules.

Analysis:
The appellant, registered under service tax for various services, faced disallowance of CENVAT credit on certain input services during an audit. The Commissioner(Appeals) allowed credit for maintenance and repair services but disallowed credit for other services, imposing a penalty under Rule 15 of CENVAT Credit Rules. The appellant challenged this decision, arguing that the disallowed services were indeed input services as per Rule 2(l) of CENVAT Credit Rules, citing Tribunal decisions supporting their claim. They presented invoices and service agreements to establish the nexus between the input services and output services provided.

The Revenue contended that the disallowed services did not qualify as input services due to a lack of nexus with output services. However, after reviewing the submissions and evidence, the Tribunal found that the appellant had provided sufficient proof of the nexus between the input services and their business operations. The Tribunal referenced specific Tribunal decisions supporting the classification of the disputed services as input services, such as air travel agency services, real estate/facility management services, and general insurance services.

Upon analyzing the nature of services, their use, and the cited Tribunal decisions, the Tribunal concluded that the impugned order was legally unsustainable. The Tribunal set aside the order, allowing the appeal of the appellant and granting consequential relief if required. The decision was pronounced in open court on 14-01-2019.