2016 (9) TMI 137 - AT - Service Tax

Input service tax credit - allowability - telephone charges (landline and mobile etc., ) given to staff - documents on which input service tax credit taken were in the name of registered office/top management personnel - responsibility to discharge burden cast under Rule 9(6) of CENVAT Credit Rules 2004 - duty paying documents - Held that - the issue is adequately covered by the judgment of Hon ble High Court of Gujarat in the case of CCE vs Excel crop care Ltd. 2008 (7) TMI 160 - HIGH COURT GUJARAT and also by the judgment of Tribunal in the case of CCE Kolkata VI Vs ITC Ltd. 2013 (3) TMI 44 - CESTAT KOLKATA . Therefore the impugned amount of credit pertaining to charges on landline and mobile phones used by the employees of the appellant being an eligible input service requires to be considered as eligible input credit. - Decided in favour of appellant with consequential relief

Summary

Issues:
Dispute over disallowance of input service tax credit on telephone charges, imposition of penalty under Rule 15(2) of CENVAT Credit rules, and interest under Section 11AA of Central Excise Act, 1944.

Analysis:
1. The dispute centered around the disallowance of input service tax credit totaling &8377; 47,620 on telephone charges provided to staff. The appellant was accused of failing to inform the department about the details of documents supporting the credit, leading to the invocation of the proviso to Section 11A(1). The adjudicating authority confirmed the disallowance, but the Commissioner (Appeals) later allowed a credit of &8377; 19,13,218 while disallowing the remaining amount and imposing a penalty under Rule 15(2) read with Section 11AC. The appellant contended that the phones were used for business operations, citing relevant case law and arguing that the demand was time-barred. The appellate authority had also allowed some credit based on invoices related to landline usage for manufacturing purposes.

2. The appellant's advocate argued that the disputed amount solely pertained to landline and mobile charges, emphasizing that the phones were used for business purposes. Citing precedents and highlighting the company's compliance with filing returns, the advocate sought the consideration of the credit as eligible. The department's representative raised concerns about potential additional services or charges included in the disputed amount, which the appellant clarified to predominantly involve landline and mobile charges.

3. Considering the arguments and relevant case law, the Member (Technical) concluded that the credit related to charges for landline and mobile phones used by the company's employees should be deemed eligible input credit. Therefore, the appeal was allowed, with any consequential benefits to be granted. The operative part of the order was pronounced at the conclusion of the hearing.