2014 (12) TMI 660 - AT - Service Tax

Waiver of pre-deposit of service tax - denial of Cenvat Credit - Input services - Held that - Services namely Brokerage for sale/purchase of shares & securities for Trading, Custodian charges, Event management services paid by them are in nature of input services having nexus to their business activity. Therefore, they are entitled to avail input service credit. We further find that as per Rule 4A of the Service Tax Rules, the required document that has been mentioned is the debit note issued by lead bank i.e. State Bank of India for Custodian charges and it contains all details. Therefore applicants are entitled to take Cenvat Credit on the said document. As the applicant had already reversed a sum of ₹ 44,620/- against the maintenance charges for residential flat of the Managing Director, therefore, the applicant has made out a case for complete waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit of service tax, interest and penalties and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
- Waiver of pre-deposit of service tax under the Finance Act, 1994 due to denial of Cenvat Credit on certain input services.

Analysis:
The judgment revolves around the issue of whether the applicant, a banking company, is entitled to waiver of pre-deposit of service tax amounting to Rs. 4,88,93,874/- along with interest and penalties under the Finance Act, 1994. The applicant's claim for Cenvat Credit on various input services, including brokerage, custodian charges, event management charges, and consortium charges, was denied by the Revenue, leading to show cause notices and impugned orders. The applicant argued that these charges were essential for their banking business activities and thus, they were entitled to the Cenvat Credit. The Revenue contended that these services were not directly related to the applicant's business activity, opposing the applicant's claim for Cenvat Credit.

Upon hearing both parties, the Tribunal analyzed the nature of the services in question. It was determined that services like brokerage for sale/purchase of shares & securities, custodian charges, and event management services had a direct nexus to the applicant's business activities, making them eligible for input service credit. Additionally, the Tribunal noted that the applicant had complied with Rule 4A of the Service Tax Rules regarding the required documents for availing Cenvat Credit. As the applicant had already reversed a portion of the credit against maintenance charges for the Managing Director's residential flat, the Tribunal found merit in the applicant's case for complete waiver of pre-deposit. Consequently, the Tribunal waived the requirement of pre-deposit of service tax, interest, and penalties, staying the recovery during the appeal's pendency.

In conclusion, the judgment ruled in favor of the applicant, granting the waiver of pre-deposit of the disputed service tax amount and associated charges. The decision was based on the Tribunal's findings that the input services in question were essential for the applicant's business activities, making them eligible for Cenvat Credit as per the relevant rules and regulations.