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2023 (6) TMI 457 - AT - Central ExciseCENVAT Credit - Business Support Service - input service distribution - denial of CENVAT Credit availed by them on the ground that ABMCPL are not an Input Service Distributor to distribute the service tax paid on BSS to their group companies - ABMCPL being a distinct person cannot be said to be an office of the Appellant - Time Limitation - HELD THAT - The Appellant has provided various services to their group companies to enable them to optimize the benefit of specialization and achieve economies of scale. The Appellant claimed that the services provided by ABMCPL to the group companies fall within the definition of Business Support Service defined under Section 65(104c) of the Finance Act, 1994 - From the definition of Business Support Service, it can be seen that providing operational or administrative assistance in any manner or providing infrastructural support service or managing distribution and logistics service, fall within the ambit of Business Support Service . The ABMCPL has been providing these services to their group companies. As per the definition of BSS mentioned above, the services rendered by ABMCPL to their group companies would rightly fall under the category of Business Support Service - It is observed that ABMCPL has been rightly paying Service Tax under BSS for the services rendered by them to their group companies. The department has also not disputed the payment of service tax by ABMCPL under the category of BSS. The Appellant referred the Board Circular No.102/3/2009-S.T. dated 23.02.2009 and TRU s Letter No. 334/4/2006-TRU, dated 28.02.2006 which clarified the scope of BSS. As per the Board Circular, services which are in the nature of assistance or support provided by the principal to the service recipient would fall under BSS. In the present case, the services rendered by ABMCPL being in the nature of support service provided to the Appellant, qualify as BSS as defined under section 65(104c) of the Finance Act, 1994 - Appellant availed BSS provided by the ABMCPL, wherein ABMCPL carried on these functions on behalf of the Appellant, thus enabling the Appellant to benefit from specialization in their manufacturing activity and achieve economies of scale. The nature of the activities so performed and their close nexus with the business of the Appellant is also clearly visible from the mails exchanged by ABMCPL with the group companies. Further, most of the activities done by ABMCPL are covered under the inclusive portion of the definition of input services viz. advertisement and market research, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, security, legal services etc - Hence the Appellant is entitled to avail the CENVAT Credit of service tax paid on BSS since they have a nexus with the overall business activity of manufacturing final goods and are essential for the day-to-day operations of the Appellant - the services rendered by the ABMCPL is rightly classifiable under the category of Business Support Service and ABMCPL has rightly paid Service Tax under the said category. The service tax paid by ABMCPL has been rightly distributed to their group companies, including Appellant. Time Limitation - HELD THAT - Appellant stated that the period involved in the Notice is from March 2007 to March 2012 whereas the Show cause Notice was issued on 22.02.2012 and 29.06.2012. Thus, part of the demand in the Notices is beyond the normal period of limitation. It is observed that the availment of CENVAT credit by the Appellant based on the invoices issued by ABMCPL is known to the Department. There is no suppression of facts involved in this case. Accordingly, the notices issued beyond the normal period is hit by limitation. The impugned order is liable to be set aside - Appeal allowed.
Issues:
The issues involved in this case are: 1. Denial of CENVAT Credit availed by the Appellant on the ground that the service provider is not an Input Service Distributor. 2. Allegation of suppression of facts and limitation period for demand. Issue 1: Denial of CENVAT Credit: The Appellant, a group company, availed CENVAT Credit which was denied by the Department on the basis that the service provider, ABMCPL, did not fit within the definition of Input Service Distributor (ISD). The Appellant argued that ABMCPL provided various services falling under the definition of 'Business Support Service' (BSS) as per Section 65(104c) of the Finance Act, 1994. They contended that the services received from ABMCPL should be classified as 'input service' and they are eligible to take CENVAT credit. The Appellant emphasized that ABMCPL's services were essential for their business operations and were rightly classified under BSS. The Appellant further argued that the Department's denial of CENVAT Credit was unfounded as ABMCPL provided services that fell within the definition of BSS, and the payment of Service Tax by ABMCPL was duly accepted by the Department without questioning the services provided. The Appellant cited legal precedents to support their argument that when the service provider's tax payment is accepted, the recipient's credit cannot be questioned. Issue 2: Allegation of Suppression of Facts and Limitation: Regarding the limitation period for demand, the Appellant contended that there was no suppression of facts as they had availed CENVAT Credit based on invoices issued by ABMCPL, which was known to the Department. They argued that the extended period of limitation should not apply in this case as all relevant facts were disclosed. The Appellant relied on legal decisions to support their stance that the demand covered under the Show Cause Notices was beyond the normal period of limitation. Judgment Summary: The Appellate Tribunal held that the services provided by ABMCPL to the group companies fell within the definition of 'Business Support Service' as defined under the Finance Act, 1994. The Tribunal observed that ABMCPL rightly paid Service Tax under BSS, and the Department did not dispute this payment. The Appellant was entitled to avail CENVAT Credit on the service tax paid by ABMCPL as the services had a nexus with the Appellant's manufacturing activities and were essential for their operations. In conclusion, the Tribunal set aside the impugned order, ruling in favor of the Appellant. The Tribunal found that the notices issued beyond the normal period of limitation were not sustainable due to the absence of suppression of facts. The Appeal filed by the Appellant was allowed. [Separate Judgment: Shri P.K. Choudhary, Member (Judicial) and Shri K. Anpazhakan, Member (Technical)]
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