2009 (12) TMI 287 - AT - Service Tax

Cenvat credit input services - The appellants took Cenvat credit of ₹ 1,59,249/- on the basis of 4 invoices of various persons who had provided the service of collection of payment from various consignees. Held that - the only ground on which Cenvat credit has been denied is that the service, in question, is not covered by the definition of input service and it is only this point which has been discussed in the order in original and the impugned order passed by the Commissioner (Appeals). Therefore, at the stage of appeal before Tribunal, the department cannot plead that service in respect of which Service tax was paid by the service provider and of which service credit was taken by the appellants, was not taxable. It is settled law that while considering the Cenvat credit on the basis of invoices of input service provider or input goods supplier the assessment at the end of service provider or input goods manufacturer cannot be reopened. - that in view of the Larger Bench decision of the Tribunal in the case of CC Bombay v. G.T.C. Industries Ltd. 2008 (9) TMI 56 - CESTAT MUMBAI-LB and also in view of the judgment Hon ble Bombay High Court in the case of Coca Cola India Ltd. 2009 (8) TMI 50 - BOMBAY HIGH COURT service in question will have to be treated as service in relation to business of the appellants and, hence, would be covered by the definition of input service as given in Rule 2(l) of Service Tax Rules, 2004

Summary

Issues:
1. Denial of Cenvat credit for input services related to collection of payment.
2. Interpretation of the definition of 'input service' under Cenvat Credit Rules, 2004.

Analysis:
1. The appellants manufactured stainless steel tubes and pipes, availing Cenvat credit of input services for payment collection. The department issued a notice seeking denial of credit, alleging the service did not qualify as an input service. The Asst. Commissioner disallowed the credit, confirmed the demand, and imposed a penalty. The Commissioner (Appeals) upheld the decision but reduced the penalty. The appellants appealed to the Tribunal against this order.

2. The appellants argued that the services provided by various entities for procuring sale orders and collecting payments were covered under the definition of 'input service.' They cited relevant legal precedents supporting their claim. The department contended that the service was not taxable during the period in question, thus, the Cenvat credit was inadmissible. The appellants emphasized that this new ground was not raised in the show cause notice, invoking Supreme Court judgments to support their argument.

3. The Tribunal noted that the sole ground for denying Cenvat credit was that the service did not fall within the definition of 'input service.' The Tribunal held that once the service provider had paid Service tax and the appellants had taken credit based on invoices, the assessment could not be reopened. Referring to the Larger Bench decision and a judgment of the Hon'ble Bombay High Court, the Tribunal concluded that bill collection services qualified as an input service related to the appellants' business. Consequently, the impugned order was deemed unsustainable, and the appeal was allowed.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision, highlighting the legal arguments presented by both parties and the basis for the final ruling.