2015 (7) TMI 590 - AT - Service Tax

Disallowance of CENVAT Credit - Capital goods - Held that - It is evident from records that the Maruti dealership business commenced during the relevant period. On a pragmatic approach, it has to be considered that the appellant needs time to set up business/business premises. Only then can the appellant apply for service tax registration. The appellant cannot be found fault with or denied the benefit otherwise available to the appellant, for the reason that, in the process of setting up of business the appellant used the available office address. The Department does not have a case that the capital goods were not utilized in the appellants Workshop. In fact a certificate has been issued by the supplier of the goods that they were supplied to the workshop and the billing was done at the appellants, IV Bridge, Napier Town, Jabalpur address because the appellant was in the process of setting up the Workshop. In the case of input services also, the Department does not have a case that these were not provided or utilized by the appellants Maruti Showroom & Workshop. It is categorically stated by the appellant that the appellant keeps separate accounts for all these business. Only because at the time of issuing the invoices by the suppliers/provider the Maruti Show room & Workshop were not registered and invoices were addressed to the appellant s temporary administration office, the appellants cannot be denied the benefit of the Credit. The appellants have got their premises registered with service tax and the dispute was only during the limited time when the appellant was in the process of setting up the business. - appellants are entitled to the benefit of Cenvat Credit - Decided in favour of assessee.

Summary

Issues:
Challenge to disallowance of Cenvat Credit for capital goods and input services.

Analysis:
The appeal challenged the disallowance of Cenvat Credit for capital goods and input services. The appellants were involved in the dealership of Yamaha Two Wheeler Vehicles and later started a Maruti four-wheeler dealership. Initially, the administrative office of the Maruti dealership was shown at the address of the appellant's Yamaha showroom. The dispute arose regarding the utilization of Cenvat credit during the period from 1.10.2004 to 30.9.2005. The Show Cause Notice alleged that the invoices were addressed to the appellant's Yamaha showroom address and that the other premises of the Maruti dealership were not registered during the relevant time.

The appellants argued that the capital goods and input services were used in the Maruti Sales Showroom & Workshop even though the premises were registered later. They contended that the initial use of the Yamaha showroom address as the administrative office of the Maruti dealership was due to the start-up process. The Commissioner (Appeals) held that separate registration for all premises where services were provided was required. However, the Tribunal disagreed, stating that the appellant needed time to set up the business premises before applying for service tax registration. The Department did not dispute the utilization of capital goods in the workshop, and certificates confirmed the supply of goods to the workshop. The Tribunal found no evidence that the invoices were bogus or sham documents.

The Tribunal emphasized that the rules regarding invoice details aim to prevent misuse of Cenvat Credit. Despite the invoices being addressed to the temporary administration office, the appellants were entitled to the credit as they had registered their premises with service tax. The dispute arose during the period of setting up the business. Consequently, the Tribunal held in favor of the appellants, allowing the Cenvat Credit of Rs. 34,535 and setting aside the impugned order with consequential relief.