2011 (4) TMI 406 - AT - Service Tax

Refund - Rule 5 of the CENVAT Credit Rules, 2004 - there is no provision in the CENVAT Credit Rules which prohibits an assessee from claiming CENVAT credit on inputs/input services prior to their registration with the Central Excise department - So long as they can establish that they have borne the incidence of duty on the inputs/input services and they have utilized the same in providing taxable output services, they are eligible for the tax credit on the inputs/input services regarding denial of CENVAT credit on account of not indicating registration number of the input service provider on the invoices - In the instant case as can be seen from the order of the adjudicating authority the receipt of the service, its utilization and payment for the service are clearly established from the records maintained by the party and produced before the adjudicating authority regarding eligibility to CENVAT Credit of the service tax paid on repair of coffee machine - It is the nature of a catering service provided to the employees which is very essential, especially for the employees working round the clock as in the case of IT companies - Appeal is allowed

Summary

Issues:
1. Entitlement to CENVAT credit on input services used prior to registration.
2. Denial of CENVAT credit due to missing registration number on invoices of input services.
3. Eligibility of CENVAT credit for service tax paid on repair of coffee machine.

Analysis:

Issue 1: Entitlement to CENVAT credit on input services used prior to registration:
The appellant, a software services provider, sought a refund of input service tax credit for services used in exporting services before their registration with the excise department. The claim was rejected based on the timing of registration. The appellant argued that there is no specific provision prohibiting credit before registration as long as the duty was borne and services were used in output services. The Tribunal cited a previous order supporting the appellant's position, emphasizing that credit cannot be denied for the period before registration. The Tribunal agreed with this view, allowing the appellant's claim.

Issue 2: Denial of CENVAT credit due to missing registration number on invoices:
The appellant's claim was partially rejected due to missing registration numbers on service provider invoices. However, the appellant contended that as per Rule 9(2) of the CENVAT Credit Rules, if the service has been accounted for and utilized, credit should be allowed even with missing particulars. The Tribunal referred to a previous case where credit was allowed despite missing registration numbers, emphasizing that as long as payment and utilization were established, credit should be granted. The Tribunal found in favor of the appellant, allowing the service tax credit and subsequent refund.

Issue 3: Eligibility of CENVAT credit for service tax paid on repair of coffee machine:
The appellant claimed CENVAT credit for service tax paid on repairing a coffee machine used to provide coffee to employees. They argued that this service was essential for their output service and thus eligible for credit. The Tribunal agreed with the appellant, stating that the repair of the coffee machine was an input service in relation to the output service provided. Consequently, the Tribunal upheld the appellant's entitlement to the service tax credit for the repair of the coffee machine.

In conclusion, the Tribunal allowed the appeals filed by the appellant, granting them relief in all three issues discussed in the judgment.