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2015 (11) TMI 233 - AT - Service TaxDenial of CENVAT Credit as distributed by the head office - Department denied the same on the ground that the head office of the appellant is not registered as Input Service Distributor - Held that - So far as claim of CENVAT credit prior to 1.4.2008 is concerned, law has permitted grant of CENVAT credit in respect of service tax paid to avail GTA services. There shall be no dispute on this count. However, whether status of ISD registration is sine qua non is the question. When the credit claimed on the services availed was not disputed nor even service tax paid is in dispute, so also the genuinity of the parties is not disbelieved, denial of CENVAT credit of the service tax suffered by the head office of the appellant shall be detrimental to the interest of justice. There is also no finding that service tax paid by the head office were not connected to the business of the appellant or were irrelevant - Even if unregistered, the liability under law remains unchanged. Therefore, denial of the distribution of CENVAT credit during unregistered period shall be anomaly to law when tax liability incurred is ordered to be paid. Accordingly, in so far as distribution of service tax credit prior to 1.4.2008 is concerned, the appellant is entitled to the CENVAT credit thereof. - Decided partly in favour of assessee.
Issues:
Claim of CENVAT credit for services availed by the appellant's head office, denial of credit due to lack of Input Service Distributor (ISD) registration, the impact of law amendment from 1.4.2008 on CENVAT credit for GTA services, the procedural requirement of ISD registration, entitlement to distribution of service tax credit, verification of credit reversal from 1.4.2008 to 31.12.2008. Analysis: 1. The appellant claimed CENVAT credit for services availed by the head office, which the department denied due to the absence of ISD registration. The services included inward and outward freight charges, telephone charges, and courier/postage charges. The appellant argued that denial of credit would be unjust as the services were genuine and relevant to their business. 2. The appellant highlighted that the period for the CENVAT credit claim was from 1.1.2005 to 31.12.2008. They did not avail the credit for GTA services post the law amendment from 1.4.2008, which introduced a reverse charge mechanism. The appellant emphasized that ISD registration is a procedural requirement, and the denial of CENVAT credit would go against the interest of justice. 3. The Revenue contended that without ISD registration, the appellant's head office could not distribute the credit of service tax paid. However, the Tribunal noted that the law permits CENVAT credit for service tax paid on GTA services. The Tribunal found no dispute regarding the services availed or the payment of service tax, and denying the credit would be unjust. 4. The Tribunal emphasized that registration is a regulatory measure to ensure compliance with the law, but even without registration, the tax liability remains unchanged. Denying the distribution of CENVAT credit during the unregistered period would be inconsistent with the law. Therefore, the appellant was deemed entitled to the CENVAT credit for the period before 1.4.2008. 5. Regarding the credit reversal from 1.4.2008 to 31.12.2008, the Tribunal directed the authority to verify the same and the appellant to cooperate. Based on the verification findings, the appropriate legal consequences would follow. The Tribunal partially allowed the appeal, directing the appellant to follow the indicated steps. This comprehensive analysis of the judgment addresses the key issues involved in the case, including the denial of CENVAT credit, the significance of ISD registration, the impact of law amendments, and the procedural requirements for claiming tax credits.
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