2018 (7) TMI 19 - AT - Service Tax

CENVAT Credit - service tax on commission paid by the appellant-assessee - duty paying documents - the credit have been denied for the reason that on the date of inspection the registration number of the service provider was not found on the invoice or the invoices levelled as debit note thus it appeared to Revenue that the same is not a proper document for taking credit - Held that - The appellant got the deficiency corrected from the service provider as it is evident that the service provider later on provided their service tax registration number by mentioning the same on the invoice under authentication of their Authorized Signatory - Credit allowed. CENVAT Credit - service tax paid to the travel agent for purchase of a ticket and to the money changer for changing of currency - rejection on the ground that the assessee could not establish that the journey was performed by the directors in relation to their business purpose as stated by them in their reply - Held that - The reason given by the court below is arbitrary and whimsical, as no reason has been given for arriving at such conclusion. There is no mention that any evidence and/or vouchers are called for which were not produced - credit allowed. CENVAT Credit - Telephone services - duty paying documents - denial on the ground that the document is not in the name of assessee - Held that - From the relevant invoice annexed in the appeal paper book which shows that the bill for telephone service is in the name of the appellant-company - credit allowed. CENVAT credit - bill of the interior designer - Held that - The existence of corporate office is essential for smooth running of the factory of the appellant and accordingly, the input service credit of ₹ 12,360/- on account of interior designer services allowed to the appellant - credit allowed - Credit on rent paid with respect to the corporate office also allowed. So far the disallowance as regards labour charge and processing fee is concerned the same have already been allowed by the courts below. Appeal allowed in part.

Summary

Issues: Disallowance of Cenvat Credit of Service Tax on certain items; Appeal against reduction of penalty

Issue 1: Input credit of service tax on commission paid
The appellant's credit for service tax on commission paid was initially denied due to missing registration number of the service provider on the invoices during inspection. However, the appellant rectified this deficiency post-inspection, and the service provider later provided the registration number on the invoice. The Adjudicating Authority refused credit citing unavailability of invoices during the visit. The tribunal found this objection unsustainable and allowed the credit of &8377; 10,90,863/- + &8377; 1,62,046 for commission paid by the appellant, where service tax was charged and paid.

Issue 2: Credit on service tax paid to travel agent and money changer
The appellant claimed credit for service tax paid to a travel agent for tickets used by staff for business activities and to a money changer for currency exchange during international business travel. The lower court rejected the credit, alleging failure to prove business-related travel by directors. The tribunal deemed this reasoning arbitrary and allowed the Cenvat Credit for travel agent and money changer services amounting to &8377; 4,67/- + Rs. 443/- + Rs. 1,111/-.

Issue 3: Disallowance of telephone services credit
A disallowance of &8377; 123/- for telephone services was based on the document not being in the appellant's name. However, the tribunal reviewed the invoice showing the bill in the appellant-company's name, allowing Cenvat Credit for telephone services.

Issue 4: Disallowance of interior designer service tax credit
The disallowed credit of &8377; 12,360/- for interior designer services was challenged by the appellant, stating the service was for office space efficiency and aesthetic value. The Adjudicating Authority disallowed the credit, citing non-relevance to final product manufacture and lack of registration as an input service distributor. The tribunal found the corporate office essential for factory operations, allowing the credit for interior designer services and rent paid for the corporate office.

Issue 5: Other disallowances and penalties
The appellant accepted the disallowance of certain credits for repair of plant and machinery, installation of elevator at a director's residence, and miscellaneous vouchers. Labour charge and processing fee disallowances were already allowed. The tribunal partially allowed the appeal, permitting most Cenvat Credits but disallowing &8377; 11,769/- in total. The penalty imposed was deleted, and the appellant was granted consequential benefits. The Revenue's appeal was dismissed.

This judgment addresses various issues related to the disallowance of Cenvat Credit on specific items, including service tax on commission, travel agent and money changer services, telephone services, interior designer services, and other miscellaneous expenses. The tribunal examined each issue in detail, overturning some disallowances based on lack of evidence or arbitrary reasoning while upholding others. The final decision allowed most Cenvat Credits, deleted the penalty, and dismissed the Revenue's appeal.