2016 (9) TMI 1110 - AT - Service Tax

Cenvat credit - availment of Cenvat credit of Branch office by Head office - entire tax liability including the tax liability of the Branch office was being discharged by their head office - non-centralization of Delhi Head Office of the appellant - Held that - in the light of the law declared by the Tribunal in the case of Manipal Advertising Services Pvt. Ltd. vs. CCE, Mangalore 2009 (10) TMI 434 - CESTAT, BANGALORE and in the case of Raaj Khosla & Co. Pvt. Ltd. vs. CST, Delhi 2008 (7) TMI 122 - CESTAT NEW DELHI , the denial of credit cannot be appreciated. Accordingly, the impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Non-centralization of Delhi Head Office leading to denial of cenvat credit.

Analysis:
The judgment pertains to a case where the appellant, engaged in providing advertisement services from their Head Office in Delhi and branch offices at multiple locations, faced proceedings for denial of cenvat credit amounting to ?18,20,120 by the revenue due to non-centralization of their Delhi Head Office with the service tax department during the relevant period. The appellant argued that despite the lack of central registration, their Head Office was discharging the service tax liability for both the Head Office and the Branch Office. The authorities below upheld the denial of cenvat credit and imposed a penalty, leading to the present appeal.

The key issue in the appeal was the non-centralization of the Delhi Head Office of the appellant. The Tribunal referred to precedents, including the case of Manipal Advertising Services Pvt. Ltd. vs. CCE, Mangalore and Raaj Khosla & Co. Pvt. Ltd. vs. CST, Delhi, where it was held that credit of duty based on invoices issued in the name of branch offices, while the head office was registered and discharging duty liability, cannot be disallowed solely due to lack of central registration. The Tribunal emphasized that as long as the services were received by the Branch Office, and the service tax liability was discharged by the Head Office, denial of credit was unwarranted.

Furthermore, the Tribunal noted that the Revenue did not dispute the receipt of services by the Branch Office, the payment of Service Tax from the Head Office, and the discharge of service tax liability for the Branch Office by the Head Office. Given these facts and the legal principles established in the aforementioned cases, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant.

In conclusion, the judgment clarified that the denial of cenvat credit based on non-centralization of the Delhi Head Office was not justified, especially when the Head Office was discharging the tax liability for the Branch Office and all services were duly accounted for. The decision was in favor of the appellant, emphasizing the importance of considering the practical aspects of tax compliance in such cases.