2015 (12) TMI 1558 - AT - Service Tax

Recovery of credit availed with interest CENVAT credit - business auxiliary services input services - Branches Sharing Expenses - Service Tax Group Resource Sharing Expenses sister concerns - The sister concerns provide the required marketing support in connection with the manufacturing operations to the appellant company - service tax paid by sister concern accepted by the department Held that - The department cannot blow both hot and cold. When the department has accepted tax on the services provided by sister concerns to appellant, then they cannot deny credit saying that no services were rendered denial of credit unjustified appeal allowed decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat Credit on services provided by sister concerns
- Disallowance of credit by the department
- Upholding of demand, interest, and penalty by Commissioner (Appeals)

Analysis:
1. The case involved the appellant, engaged in manufacturing inverters and converters, availing Cenvat Credit of Service Tax paid on services provided by sister concerns for 'Branches Sharing Expenses' and 'Service Tax Group Resource Sharing Expenses' categorized as 'Business Auxiliary Service.' The department contended that the invoices from sister concerns were for sharing common expenses, not for services, leading to a show cause notice for denial of credit and recovery. The primary authority and Commissioner (Appeals) upheld the disallowance and ordered recovery of credit, interest, and penalty.

2. The appellant argued that since the department did not dispute the service tax payments by sister concerns, they should be recognized as service providers. The appellant maintained that the sister concerns provided essential services like IT support, marketing, logistics, procurement, and dispatch, integral to manufacturing operations. The appellant contended that the services had a direct nexus with manufacturing activities, qualifying as input services. The appellant criticized the department for accepting tax on services but denying credit by alleging no service was rendered, highlighting the unjust nature of the demand for credit.

3. The tribunal, represented by Ms. Sulekha Beevi C.S., Judicial Member, found merit in the appellant's arguments and set aside the impugned order, allowing the appeal with consequential reliefs, if any. The judgment emphasized the integral connection between the services provided by sister concerns and the manufacturing activities of the appellant, ultimately ruling in favor of the appellant by rejecting the department's stance on disallowing the credit.