2018 (11) TMI 169 - AT - Service Tax

CENVAT Credit - period October 2011 and March 2015 - input services - security services for the security guards hired by them - lift maintenance service - service tax paid by the appellant under reverse charge mechanism from the services of chartered accountant filed by them. Service tax paid by the appellant under reverse charge mechanism from the services of chartered accountant filed by them - Held that - There is no legal provision under which such an amount could be paid as service tax or credit of the same would have availed by them - the credit of service tax availed by the appellant on the services of chartered accountant paid wrongly by them under reverse charge mechanism needs to be disallowed. CENVAT Credit - Lift maintenance service - security services - Held that - The appellant hired these services and paid for them along with service tax. Given the nature of these services running their business from others the same complex would have also benefited from them. This enjoyment is like the enjoyment of one s porch light by passers by. It does not dilute the utility of these services by the appellant or their nexus with their output services - There is no rule under which the Revenue can vivisect and partly deny the credit on these services simply because somebody else also incidentally benefited from them - Credit allowed on these two services. Appeal allowed in part.

Summary

Issues:
- Dispute over availing CENVAT credit on security services, lift maintenance, and chartered accountant services.
- Applicability of reverse charge mechanism on service tax paid for chartered accountant services.
- Allocation of service tax credit for services enjoyed by multiple companies.
- Imposition of penalties under sections 77 & 78 of Finance Act.

Analysis:
1. CENVAT Credit Dispute:
- The appellant, engaged in storage and warehousing, availed CENVAT credit on security services, lift maintenance, and chartered accountant services.
- The Revenue contended that since other companies in the same complex also benefited from these services, the appellant should only receive a portion of the credit.
- The Tribunal ruled that the appellant hired and paid for these services in full, and incidental benefits to others do not warrant denying them the full credit.
- Consequently, the demand for lift maintenance and security services credit was set aside, while the credit for chartered accountant services under reverse charge mechanism was disallowed.

2. Reverse Charge Mechanism Applicability:
- The appellant admitted that there was no legal provision for paying service tax under reverse charge for chartered accountant services.
- The Tribunal agreed that the appellant wrongly availed credit for these services and upheld the disallowance of such credit.

3. Allocation of Service Tax Credit:
- The Revenue argued that since sister companies in the same complex also benefited, the appellant should not receive full credit.
- The Tribunal emphasized that the appellant exclusively hired and paid for these services, and incidental benefits to others do not diminish their entitlement to full credit.
- Therefore, the demand for recovery of CENVAT credit on lift maintenance and security services was set aside.

4. Penalties Imposition:
- The Tribunal reduced the penalties proportionately based on the outcome of the credit allocation decision.
- Interest and penalties were not sustained for lift maintenance and security services, while penalties were upheld for irregularly availed chartered accountant services credit.

In conclusion, the Tribunal disposed of the appeal by setting aside the demand for lift maintenance and security services credit, upholding the disallowance of chartered accountant services credit under reverse charge mechanism, and reducing penalties accordingly.