2013 (10) TMI 388 - AT - Service Tax

Stay application - Cenvat Credit - Nexus between output service and input service - Rent-a-cab service and Air Travel agents Service - Held that - In the case of Rent-a-cab service and Air Travel agents Service the applicants have produced sample invoices. It is not proper to deny such credit without any material showing that they were making any false declaration regarding the usage of such service in relation to providing output service. It is not possible to prove nexus between services which are intangible with output services which are intangible through documents unless extensive documentation is done and such documents are scrutinized. Such procedure is not envisaged under the Cenvat scheme. Checks if required are to be done through auditing of the books of accounts and checks of sample vouchers at the time of audit. Asking an assessee to prove nexus for each and every credit with output service can only be a attempt to tire out the assessee which should not be asked for unless there is some material to doubt the veracity of the accounts and vouchers - there are credits taken on services which got excluded from definition of input services from 01-04-11 for the reason that services were received prior to 01-04-11 though bills were received after 01-04-11. This issue is not raised in SCN and adjudicated - Stay granted.

Summary

Issues:
1. Denial of Cenvat credit on various input services.
2. Interpretation of 'input services' definition.
3. Consideration of construction service, vehicle maintenance, and Rent-a-Cab services as input services.
4. Nexus between input services and output services.
5. Exclusion of certain services from the definition of 'input services' post 01-04-11.

Analysis:
1. The Applicant, a provider of telecom services, had taken Cenvat credit on input services during a specific period. The Revenue contended that these services did not qualify as 'input services,' leading to the issuance of show cause notices. The amounts were confirmed against the Applicant along with interest and penalty.

2. The dispute revolved around the definition of 'input services' post an amendment on 1.4.2011, excluding certain services. The Applicant argued that the services in question were received before this amendment and should be considered as input services. The Applicant provided sample invoices to establish the nexus between the input services and the output services but faced denial of credit by the adjudicating authority.

3. The Tribunal referenced previous decisions regarding the credit eligibility on construction services related to cell towers and inputs used for constructing immovable property. It was noted that the issue of construction services as input services had been decided in favor of the assessees in various court judgments, emphasizing the allowance of credit on services used for setting up premises for output service providers.

4. Regarding Rent-a-Cab and Air Travel Agent services, the Tribunal emphasized the need for a proper nexus between the input services and the output services. It was deemed inappropriate to deny credit without substantial evidence proving false declarations. The Tribunal highlighted that proving such a nexus through extensive documentation was not required under the Cenvat scheme, suggesting that checks should be conducted during audits rather than burdening the assessee with extensive proof.

5. The Tribunal acknowledged credits taken on services excluded from the 'input services' definition post 01-04-11 due to the timing of service receipt and bill generation. However, as this issue was not raised in the show cause notice or adjudicated, the Tribunal refrained from expressing a view on the matter. Ultimately, the Tribunal granted a waiver of pre-deposit of dues and stayed the collection of such dues during the appeal's pendency, aligning with a previous stay order.