2016 (12) TMI 782 - AT - Central Excise

Denial of cenvat credit - Management Service - Share Registry Service - Advertisement Service - Company Secretary Service - Chartered Accountant Service - services commonly availed by the four units of appellant - period April 2012 to March 2013 - Held that - It is very clear from the above rules that, only w.e.f. 1.4.2012, credit of service tax attributable to service used in more than one unit shall be distributed pro rata on the basis of turn over during the relevant period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period. However, in the instant case, the disputed services are not definitely in the nature of those which are attributable or utilized in all the units. In any case, these services are very much in the nature of management services, share registry etc. which would be commercial and availed by corporate office which is situated in the premises of the appellant herein, and as per Rule 7 (c), credit of service tax attributable to service used wholly in an unit shall be distributed to that unit. It is also seen that while the Commissioner (Appeals) has made mention of the discrepancy in period of dispute in para-3 of his order, however, he has not agreed or disapproved the same. In this circumstance, I am constrained to remand the matter to Commissioner (Appeals) who will give a reasonable opportunity of hearing to appellant and pass a reasoned and analysed order in the matter. Appeal allowed by way of remand.

Summary

Issues: Denial of cenvat credit on Management Service, Share Registry Service, Advertisement Service, Company Secretary Service, and Chartered Accountant Service for the period April 2012 to March 2013.

In this case, the main issue revolves around the denial of cenvat credit on various services availed by the appellant's four units, including the corporate office, from April 2012 to March 2013. The appellant argues that the credit denial is based on the introduction of Rule 7(d) of the Cenvat Credit Rules, 2004, effective from 1.7.2012, whereas the actual disputed period is from 1.4.2009 to 31.3.2011. The appellant asserts that this factual error can be proven through ledger accounts, which were brought to the attention of the Commissioner (Appeals) but not considered. The respondent, on the other hand, maintains that the credit availment should be governed by Rule 7(d) of the CCR from 1.7.2012 onwards.

Upon examination, it is noted that Rule 7(d) of the CCR, effective from 1.4.2012, specifies the distribution of service tax credit for services used in multiple units based on turnover. However, the disputed services in this case, such as management services and share registry services, are primarily utilized by the corporate office and not uniformly across all units. As per Rule 7(c), credit for services used wholly in one unit should be allocated to that specific unit. The judgment highlights that the services in question, like management and share registry services, are commercial in nature and predominantly availed by the corporate office situated within the appellant's premises.

Furthermore, the judgment acknowledges a discrepancy in the period of dispute as pointed out by the Commissioner (Appeals) but notes that no definitive decision was made regarding this issue. Consequently, the matter is remanded back to the Commissioner (Appeals) for a thorough reconsideration, providing the appellant with a fair opportunity to present their case and receive a reasoned and analyzed order. Ultimately, the appeal is allowed, leading to a remand to the Commissioner (Appeals) for further review and decision-making.