2022 (5) TMI 1037 - AT - Central Excise

CENVAT Credit - duty paying invoices - case of the department is that the service recipient is M/s. Valia Industries Association therefore credit cannot be allowed to M/s. Gujarat Guardian Limited who is not a service recipient - Club or association services - difference between the Association and its Members - mutuality of services - HELD THAT - The appellant as per Industries Association namely M/s. Valia Industries Association is only an association which includes the appellant also as its member. As per the Deed of Association dated 30.06.2008 the association was founded in the name of M/s. Valia Industries Association for operating water supply for the common benefit of all the members. The association engaged Shree Rang Services to handle the said water supply project. Shri Rang Services issued invoices for handling the water supply in favour of M/s. Valia Industries Association. M/s. Valia Industries Association proportionately shared the expenditure among the members of the association as per actual use of services. With these facts it is clear that the appellant is in fact received the services and the expenditure for the same was borne by the appellant only. Whether invoices issued in favaour of M/s. Valia Industries Association is not valid invoice for taking credit? - HELD THAT - Since there is no dispute that Shree Rang Services issued valid cenvatable invoices in favour of M/s. Valia Industries Association and on the basis of proportionate distribution of expenditure the appellant have availed credit. Since the appellant is member of association as per the judgment of Hon ble Supreme Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT there is no difference between the Association and its Members. Accordingly service provided by Shree Rang Services to M/s. Valia Industries Association is deemed to have been provided to its members. The appellant have received the service and borne the expenditure along with service tax they are entitled for Cenvat credit - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellant is entitled to avail Cenvat credit for services received through an industries association.
- Validity of invoices issued in favor of the industries association for claiming credit.

Analysis:

1. Entitlement to Cenvat Credit:
The appellant, a member of an industries association, availed Cenvat credit on services received through the association. The department contended that since the service recipient was the association, the appellant, not being a direct service recipient, cannot claim credit. The appellant argued that they bore the proportionate cost of the service and were entitled to the credit. The Tribunal noted that the association was formed for common benefits, and the appellant, being a member, effectively received the services. The Tribunal relied on the principle established in the case of State of West Bengal Vs. Calcutta Club Limited, where the Supreme Court held that there is no distinction between an association and its members. Consequently, the services provided to the association were deemed to have been provided to its members, including the appellant. Therefore, based on these findings, the Tribunal allowed the appellant to avail Cenvat credit.

2. Validity of Invoices:
The Revenue argued that the invoices issued in favor of the industries association were not valid for claiming credit. However, the Tribunal found that the service provider had issued valid cenvatable invoices to the association, and the appellant had availed credit based on the proportionate distribution of expenses among the association members. Since the appellant was a member of the association, the Tribunal held that they were entitled to claim credit for the services received. The Tribunal, therefore, set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to avail Cenvat credit for services received through the industries association. The judgment emphasized the legal principle that there is no distinction between an association and its members, thereby entitling the appellant to claim credit for the services received. The decision highlighted the importance of considering the practical arrangements and relationships between parties in determining the eligibility for tax credits.