2019 (1) TMI 824 - AT - Service Tax

CENVAT Credit - input services were consumed at Head Office Kanjurmarg office - denial of credit on the ground that the branch offices were not registered - Held that - The taxable services were provided from the branch offices and the input services on which credit have been availed at their Kanjurmarg offices had been utilized in providing the taxable output service. However, detailed verification of records necessary. Merely because the branch offices were not registered, hence, Cenvat credit availed on input services used for providing output services cannot be denied to the appellant when the centralized billing and accounting system was undertaken from the Kanjurmarg office. The impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority to verify the claim of the appellant - appeal allowed by way of remand.

Summary

Issues:
Entitlement to Cenvat credit on input services used at branch offices.

Analysis:
The appellant, engaged in providing taxable services, availed Cenvat credit on input services during 2006-2007 to 2011-2012 and utilized it for discharging Service tax liability from their Kanjurmarg office. The dispute arose as the branch offices at Ghatkopar, Vikroli, and New Delhi were not registered with the service tax department. Two show cause notices were issued for recovery of inadmissible Cenvat credit of ?3,13,00,953 along with interest and penalty. The appellant contended that their Kanjurmarg office had a centralized billing and accounting system for all offices, and services were rendered from branch offices with invoices raised from the Head Office. They argued that Cenvat credit should not be denied merely due to branch offices' non-registration. The Revenue, however, insisted on denying the credit. The Tribunal found that the appellant had a centralized system at Kanjurmarg, and a sample basis analysis showed a correlation between services rendered at branch offices and input services availed at Kanjurmarg. The Tribunal held that denial of Cenvat credit solely based on branch offices' non-registration was not justified. The matter was remanded to the adjudicating authority for further verification.

The key issue in this appeal was the entitlement of the appellant to Cenvat credit on input services utilized at their branch offices. The appellant argued that their centralized billing and accounting system at Kanjurmarg justified the credit availed, even though branch offices were not registered. The Tribunal observed that the appellant's documentation indicated a connection between input services availed at Kanjurmarg and services provided at branch offices. The Tribunal emphasized that denial of credit solely due to non-registration of branch offices was unwarranted. The Tribunal set aside the impugned order and remanded the matter for detailed verification by the adjudicating authority, keeping all issues open.

The Tribunal's decision highlighted the importance of a centralized billing and accounting system in justifying the entitlement to Cenvat credit on input services. The Tribunal acknowledged the appellant's efforts to establish a link between services rendered at branch offices and input services availed at Kanjurmarg. The decision emphasized that denial of credit should not be based solely on the non-registration of branch offices. By remanding the matter for further verification, the Tribunal ensured a thorough examination of the appellant's claim, maintaining fairness and adherence to legal principles.