2019 (7) TMI 483 - AT - Central Excise

CENVAT Credit - input service - service tax paid on transportation of goods by Railway, distributed through ISD of the assessee - denial of credit on the ground that the service provider was not registered till 22.01.2013, when they received the registration certificate and service tax code - HELD THAT - It is deemed fit and proper by allowing this appeal by way of remand to the adjudicating authority with the direction that he shall ascertain the status of registration and compliance of Western Railway from the concerned Commissionerate where Western Railway is registered, i.e. Service Tax-I, Mumbai, Division-II, Range Group-X. If Western Railway is found to have filed return, in that case the input service credit cannot be denied. Appeal allowed by way of remand.

Summary

Issues: Denial of input credit of service tax paid on transportation of goods by Railway distributed through ISD.

Analysis:
1. The appellant, engaged in cement manufacturing, availed transportation services from West Central Railway division for transporting finished goods. The service was arranged by the appellant's head office registered as an Input Service Distributor (ISD) under the Credit Rules. Rail service was initially exempted from service tax until 30.09.2012, after which service tax was levied. The Railway Board issued a Circular on the levy of service tax on rail transportation.

2. During the period when the service provider, West Central Railway, was not registered, they raised invoices on the ISD without indicating the service tax registration number. The ISD paid service tax to the Railway. The appellant availed credit of service tax paid on transportation based on these invoices. A show cause notice was issued, alleging wrongful availing of cenvat credit on ineligible documents.

3. The impugned order-in-appeal held that since the service provider was not registered during the relevant period, the input credit was rightly denied. The appellant contended that the service provider was registered in January 2013 and being a government department, the chances of tax default were remote. The appellant requested a remand to ascertain the compliance of Western Railway.

4. The Tribunal allowed the appeal by way of remand to the adjudicating authority to ascertain the registration and compliance status of Western Railway. If the Railway is found to have filed returns, the input service credit cannot be denied. The appellant was directed to assist the adjudicating authority in providing necessary details. The issue of limitation was left open for further consideration.