2021 (9) TMI 488 - AT - Service Tax

CENVAT Credit - input services - service tax paid for accommodation such as guest house/hotel - denial on the premise that services might have been used for personal purposes by the employees - HELD THAT - It is clearly stated that when the employee of the appellant goes for an official visit for consultancy to their clients for the stay thereof, they required accommodation by way of guest house/hotel. These facts has not been controverted by the revenue with any tangible evidence. In the absence of any contrary evidence produced by the revenue, the allegation is only an allegation and that cannot be turned into demand as revenue has failed to produce any evidence on record to say that the guest house/hotel has been used by the employees of the appellant for their personal use. The Cenvat credit cannot be denied to the appellant - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat credit denial on service tax paid for accommodation due to potential personal use by employees.

Analysis:
The appellant, a management consultant company, appealed against the denial of Cenvat credit on service tax paid for accommodation like guest houses/hotels, alleging potential personal use by employees. The appellant hired guest houses/hotels for employee stays during official visits and paid service tax on these services. A show cause notice was issued for reversal of Cenvat credit, interest, and penalty. The appellant contended that the accommodation was solely for official use, supported by the company policy detailing proper usage. The revenue alleged lack of data on official use, implying personal use. The Tribunal noted the company policy's clarity on accommodation usage during official visits, unchallenged by the revenue with evidence. Since no evidence of personal use was presented, the allegation remained unsubstantiated. Consequently, the Tribunal set aside the impugned order, allowing the appeal and any consequential relief.

This judgment highlights the importance of substantiating allegations with evidence in tax matters. The Tribunal emphasized the necessity for tangible proof to support claims of inadmissible Cenvat credit. The company's clear policy on accommodation usage played a crucial role in the decision, underscoring the significance of internal regulations in such disputes. Additionally, the Tribunal's focus on the lack of contradictory evidence from the revenue underscores the burden of proof in tax disputes resting on the accusing party. Overall, the judgment serves as a reminder of the essential role of evidence and documentation in resolving tax credit disputes effectively.