2018 (6) TMI 194 - AT - Service Tax

CENVAT credit - various input services - denial on account of nexus - Held that - All the input services involved in the present appeal fall in the definition of input service and they have a direct impact on the output services of the appellant and has been held to be input service in the decisions relied - credit allowed. CENVAT credit - duty paying documents - denied on the ground that the documents submitted by the appellant claiming to be cenvatable documents does not provide for certain details and also on the ground that credit has been availed without support of relevant documents which is in contravention of Rule 9 of CCR 2004 - relaxation in terms of Rule 4A of STR - Held that - The CENVAT credit of ₹ 19,27,868/- was availed on banking services on the strength of the documents issued by the bank and the said documents have also been placed on record which shows the payment of service tax to bank for various services rendered by the bank - further, Rule 4A of the Service Tax Rules, 1994 clearly covers the case of the appellant - decided in favor of appellant. Time limitation - Held that - Though the appellant has taken the limitation point in both the appeals but I am not giving any findings on the limitation when both the appeals are allowed on merits. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Disallowance of CENVAT credit on various input services.
2. Validity of documents for availing CENVAT credit.
3. Allegations of suppression and mis-declaration.
4. Invocation of the extended period for demand.

Issue-wise Detailed Analysis:

1. Disallowance of CENVAT Credit on Various Input Services:
The appellants, engaged in providing telecommunication services, were denied CENVAT credit amounting to ?27,05,949/- on certain input services such as restaurant service, event management service, health management service, apartment maintenance, and credit in respect of Indian Hotels. The department contended that these services did not impact the efficiency of the provision of output services and had no nexus with the output services, as stipulated in Circular No.120/01/2010-ST dated 19.10.2010. The appellant argued that these services fall within the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, as they were not availed for personal use but were directly connected with the output services. The appellant supported this with various judicial precedents, demonstrating the nexus between the input and output services. The tribunal, after considering the submissions and precedents, concluded that the input services in question have a direct impact on the output services and allowed the appeal by setting aside the impugned order.

2. Validity of Documents for Availing CENVAT Credit:
In the second appeal, the appellants were denied CENVAT credit of ?19,27,869/- on the grounds that the documents did not provide necessary details like the name of the service provider, registration number, and amount paid, which is required under Rule 9 of CENVAT Credit Rules, 2004. The appellant contended that the credit was availed on banking services based on valid documents, and provided a detailed table explaining the nature of expenses and corresponding service tax amounts. The tribunal found that the documents issued by the bank showed the payment of service tax for various services rendered by the bank and that Rule 4A of the Service Tax Rules, 1994, which provides special relaxation, covered the appellant's case. The tribunal referred to cases like Prudential Process Management Services India Pvt. Ltd. and M/s. Vodafone Essar Spacetel Ltd., and allowed the appeal by setting aside the impugned order.

3. Allegations of Suppression and Mis-declaration:
The department alleged suppression and mis-declaration by the appellant, justifying the invocation of the extended period for demand. The appellant argued that they had regularly filed ST-3 returns and cooperated with the department, and that the irregular credit was a minimal percentage of the total credit availed. The tribunal, while allowing the appeals on merits, did not provide specific findings on the allegations of suppression and mis-declaration.

4. Invocation of the Extended Period for Demand:
The department invoked the extended period for demand, alleging suppression of facts by the appellant. The appellant contended that the demand was barred by limitation, and that the allegation of suppression was not sustainable. The tribunal, while allowing the appeals on merits, did not give specific findings on the limitation issue.

Conclusion:
Both appeals were allowed by setting aside the impugned orders, with the tribunal concluding that the input services in question fall within the definition of 'input service' and that the documents provided were valid for availing CENVAT credit. The tribunal did not provide specific findings on the limitation issue due to the appeals being allowed on merits.

← Previous Next →