2016 (12) TMI 1333 - AT - Service Tax

Recovery of irregularly availed CENVAT credit - whether the credit is admissible on input services used for construction of warehouse? - MS items which were used for fabrication of storage tanks - Held that - reliance placed on the decision of the case of Sai Samhita Sotrages (P) Ltd 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT , where it was held that assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided - credit allowed. Credit - interior furnishings - works contract service for modification of dining hall and other repair works - cleaning service at the terminal area - Held that - It is for the appellant who is availing the benefit of credit to upkeep and maintain proper document if he intends to avail credit which the appellant has failed in the present case - disallowance of credit on above services justified on this ground. Credit allowed on insurance policy. Appeal allowed - decided partly in favor of assessee.

Summary

Issues:
- Disallowance of irregular credit availed by the appellant during 2007-08 and 2008-09.
- Eligibility of credit on various items and services used by the appellant for storage and warehousing.
- Proper documentation and invoices required for availing credit.
- Admissibility of credit on input services used for construction of warehouse.
- Nexus between the availed credit and the output services provided by the appellant.

Analysis:

The case involved the disallowance of irregular credit availed by the appellant for storage and warehousing services during 2007-08 and 2008-09. The appellant had availed credit on various items and services, including MS items for fabrication of storage tanks, interior decoration of the office, repair charges, laptop, membership fee, modernization of dining hall, civil construction works, insurance policy, and services from contractors. The issue of eligibility of credit on these items was extensively discussed during the proceedings.

The appellant argued that the credit should be allowed as the items and services were directly related to their business activities. They cited precedents and legal provisions to support their claim. However, the Department contended that certain credits, such as laptop expenses and membership fees, lacked a nexus with the output services provided by the appellant. The Department also raised concerns about the lack of proper documentation and invoices for some of the availed credits.

The Tribunal analyzed each item of credit individually. It held that the credit on MS items used for the construction of warehouse was eligible based on a precedent set by the jurisdictional High Court. However, the credit for interior decoration expenses, modification of dining hall, and other repair works was disallowed due to inadequate documentation and lack of proper invoices. The Tribunal emphasized the importance of maintaining proper documents for availing credit facilities.

Ultimately, the Tribunal partially allowed the appeal, permitting the credit on MS items and insurance policy while disallowing credits related to interior decoration, repair works, and cleaning services due to insufficient documentation. The judgment highlighted the significance of maintaining proper documentation to support credit claims and emphasized the nexus between the availed credit and the business activities of the appellant.