2019 (3) TMI 1386 - AT - Service Tax

CENVAT Credit - Outdoor Catering Services - Rent for Car Parking - Subscription for Global Tender Information and certain services - denial for the reason that the invoices are not produced - Held that - The period involved in prior to 01.04.2011, when the definition of input services‟ had a vide ambit as it included phrases activity relating to business . The Tribunal as well as various High Courts have held that almost all the activities which fall into the category of activity relating to business will be eligible for credit. Penalty - Held that - Taking note of the fact that the appellant had initially availed the credit on invoice and thereafter, could not trace the invoice and also taking into consideration that they had availed the credit on a bonafide belief that the credit is eligible to them, the penalty imposed in this regard for ₹ 66,854/- cannot sustain and has to be set aside. Appeal allowed in part.

Summary

Issues:
Disallowance of input services credit for Outdoor Catering Services, Rent for Car Parking, Subscription for Global Tender Information; Contesting disallowance of credit amounting to ?1,49,840; Eligibility of credit for activities related to business pre-01.04.2011; Setting aside of penalty for non-production of invoices.

Analysis:
The appellants were engaged in providing various services and were issued a show-cause notice proposing to disallow credit on certain services due to non-production of invoices. The original authority and the Commissioner (Appeals) upheld the disallowance, leading to the appeal. The period involved was pre-01.04.2011.

During the hearing, the appellants withdrew contest for a portion of the demand, explaining the reasons for withdrawal related to traceability of invoices and branch inclusion in registration. They contested the disallowance of credit amounting to ?1,49,840 for services like Outdoor Catering, Rent for Car Parking, and Subscription for Global Tender Information, asserting that all activities related to their business were eligible for credit pre-01.04.2011.

The Tribunal noted that pre-01.04.2011, the definition of "input services" encompassed activities relating to business. It was established through precedents that most activities falling under this category were eligible for credit. Consequently, the Tribunal found the disallowance of credit amounting to ?1,49,840 to be eligible and set aside the demand, while maintaining the disallowance of ?66,845. The penalty imposed for non-production of invoices was also set aside considering the appellant's initial belief in the eligibility of credit.

In conclusion, the Tribunal modified the impugned order to allow credit of ?1,49,840 and set aside the penalty of ?66,854. The appeal was partly allowed with consequential reliefs, if any, in favor of the appellant.