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2023 (5) TMI 196 - AT - Service TaxCENVAT Credit - input service distribution - credit has been distributed without registering itself as input service distributor - HELD THAT - This Tribunal in the appellant s own case for the previous period has allowed the cenvat credit and the Revenue had filed appeal before the Hon ble High Court of Punjab and Haryana against the said decision but subsequently withdrew their appeal from the Hon ble High Court on monetary grounds. This issue has been considered by the Hon ble Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND CUSTOMS BANGALURU-II, VERSUS M/S. HINDUJA GLOBAL SOLUTIONS LTD., 2022 (4) TMI 71 - KARNATAKA HIGH COURT and the Hon ble High Court of Karnataka after considering the decision of the Hon ble Gujarat High Court in case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD 2016 (2) TMI 183 - GUJARAT HIGH COURT and the decision of the Hon ble High Court of Rajasthan in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, JAIPUR VERSUS NATIONAL ENGINEERING INDUSTRIES LTD. 2016 (5) TMI 12 - RAJASTHAN HIGH COURT and the Circular of Central Board of Excise and Customs dated 16.02.2018 accepting the judgement of the High Court of Gujarat and Rajasthan, has held that the availment based on invoices issued by input service distributor prior to registration under Service Tax (Registration of Special Category of Persons) Rules, 2005 is only procedural irregularity and hence the denial of credit is bad in law. The impugned order is not sustainable in law - Appeal allowed.
Issues involved:
The issue involves the entitlement of the appellant to avail Cenvat Credit of Rs. 56,95,997 allegedly distributed by its Noida office without registering as an "input service distributor" for the period prior to registration. The main contention is whether the appellant's centralized registration for service tax payment is sufficient to claim credit for input services received by its Noida office. Summary of Judgment: Facts of the Case: The appellant, a provider of taxable service, is centrally registered with the Service Tax Department through its Parwanoo office. The Department objected to the appellant's distribution of Cenvat Credit by its Noida office prior to registration as an input service distributor. A show cause notice was issued demanding service tax based on an audit report. Impugned Order: The Commissioner confirmed the demand, stating that the Noida office needed to register as an "Input Service Distributor" to claim credit for input services, separate from the Parwanoo office's centralized registration. Appellant's Argument: The appellant argued that they are entitled to the credit as per Cenvat Credit Rules and precedent decisions. They cited a previous Tribunal order in their favor and the High Court's decision allowing the revenue to withdraw their appeal on monetary grounds. Tribunal's Decision: The Tribunal noted its previous order allowing Cenvat Credit for the appellant and referenced similar rulings by other High Courts. It highlighted that procedural irregularities in registration do not automatically disentitle the appellant from availing the credit. Following the precedent decisions, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any, as per law. Significant Legal Precedents: The judgment referred to the case of Commissioner of Central Excise, Service Tax & Cus., Bengaluru vs. Hinduja Global Solutions Ltd. where the High Court held that denial of credit based on invoices issued by an input service distributor prior to registration is a procedural irregularity and not a valid reason for denial of credit. The judgment also cited the Circular of Central Board of Excise and Customs dated 16.02.2018, accepting the judgments of various High Courts, emphasizing that substantial benefit cannot be denied due to procedural irregularities. In conclusion, the Tribunal allowed the appellant's appeal based on the established legal principles and previous decisions, setting aside the impugned order.
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