2015 (7) TMI 1006 - AT - Service Tax

CENVAT Credit - input services - legal services in respect of manufacture of Battery Operated Electric Cars - Held that - Admittedly, the dealers who were appointed by the assessee outside India required legal assistance, which stands given to them by legal firm at the behest of the appellant. For grant of such legal assistance, invoices were raised by foreign legal firm to the appellant in India and the consideration stands paid by the appellant only. The service tax was also paid by the appellant on reverse charge basis. In such a scenario, it has to be held that the legal assistance provided to the appellant s dealers located in foreign country is to the appellant himself and has nexus with the appellant s activity of selling their motor vehicles outside India. The Tribunal in the case ofGolden Tobacco Ltd. Vs. CCE 2013 (6) TMI 617 - CESTAT MUMBAI has held that legal services are input services on which Cenvat credit would be available. Having held that the legal services were provided to the dealers located outside India, for which the company has paid service consideration as also discharged the service tax, it has to be held that they are entitled to Cenvat credit of service tax paid. - Decided in favour of assessee.

Summary

Issues:
1. Availability of Cenvat credit on service tax paid for "Air Travel Agency Services."
2. Eligibility for Cenvat credit on service tax paid for "Legal Services" provided by a foreign legal firm to dealers appointed outside India.

Analysis:

Issue 1: Availability of Cenvat credit on "Air Travel Agency Services"
The appellant, engaged in manufacturing Battery Operated Electric Cars, availed Cenvat credit on service tax paid for various input services. The lower authorities denied credit for "Air Travel Agency Services." However, precedent decisions by the Tribunal, such as C.C.E. Vs. Fine Care Biosystems, Goodluck Steel Tubes Ltd. Vs. C.C.E., and Emcon Technologies India Pvt. Ltd. Vs. C.C.E., have established that such services qualify as "input services," making the Cenvat credit of service tax paid available to the assessee.

Issue 2: Eligibility for Cenvat credit on "Legal Services" provided by a foreign legal firm
Regarding "Legal Services," the lower authorities allowed service tax credit for services received by domestic dealers but denied it for services rendered by a foreign legal firm to dealers appointed outside India. The appellant contended that the legal services were provided at their behest to dealers selling vehicles abroad. Invoices were raised in the appellant's name, and payment, including service tax on reverse charge basis, was made by the appellant. The Tribunal, citing the case of Golden Tobacco Ltd. Vs. CCE, held that "legal services" are input services eligible for Cenvat credit. Since the legal assistance was provided to the appellant's dealers abroad, paid for by the appellant, and related to selling motor vehicles overseas, the appellant was deemed entitled to Cenvat credit for the service tax paid.

The judgment set aside the impugned orders, allowing the appeal with consequential relief to the appellant. The stay petition and appeal were disposed of accordingly.