2008 (1) TMI 96 - AT - Service Tax

Input service - landline phones installed by company in the Directors and Company Officials residence - business purpose - mobile phones and landline phones have been installed by the Company for business purpose and the bills are paid by the company. Therefore, it has to be considered as input services and that they are eligible for the benefit of the Cenvat credit

Summary

Issues:
1. Eligibility of availing Cenvat credit on mobile and landline phones installed outside the factory for business purposes.

Analysis:
The appeals raised a common question regarding the utilization of Service Tax credit for duty payment on final products, specifically concerning availing credit on Telephone Services for certain periods. The Revenue contended that such credit utilization was incorrect as the phones did not qualify as input services, leading to Show Cause Notices and denial of credit. The learned Counsel referenced judgments from the Mumbai and Ahmedabad Benches supporting the eligibility of availing Cenvat credit on mobile phones used for business purposes, arguing that the same criteria should apply to telephones installed in Directors' and Officers' premises. On the other hand, the learned JDR defended the order, stating that the appellants were not eligible for input credit on phones installed outside the factory. However, upon careful consideration, the Member (J) observed that since the phones were installed by the Company for business purposes and the bills were paid by the company, they should be considered as input services eligible for Cenvat credit. The Member (J) cited precedents from the Mumbai and Ahmedabad Benches supporting the eligibility of input services related to mobile phones, concluding that the same rationale should apply to landline phones in Directors' and Company Officials' residences. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

This judgment clarifies the eligibility of availing Cenvat credit on mobile and landline phones installed outside the factory for business purposes. It emphasizes that if such phones are used for business activities and the bills are paid by the company, they qualify as input services eligible for Cenvat credit. The decision is supported by precedents from the Mumbai and Ahmedabad Benches, ensuring consistency in interpreting the relevant rules and providing relief to the appellants in this case.