2025 (1) TMI 429 - AT - Service Tax

CENVAT Credit - denial of credit on the ground that appellant had availed and utilized Cenvat credit on input services on the strength of invoices which were not addressed to its registered premises as per Rule 4A(1) of the Service Tax Rules, 1994 read with Rule 9(2) of Cenvat Credit Rules, 2004 - HELD THAT - This issue is no more res integra and the Tribunal in various decisions has consistently held that Cenvat credit cannot be denied on procedural irregularities. Reliance can be placed in SPICE DIGITAL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2023 (5) TMI 196 - CESTAT CHANDIGARH where it was 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.' Further, it is found that in the case of M/S RAJENDER KUMAR ASSOCIATESS VERSUS COMMISSIONER OF SERVICE TAX, DELHI-II 2020 (11) TMI 621 - CESTAT NEW DELHI , Hon'ble CESTAT has held that registration of the premises is not a condition for availing cenvat credit. In this order. Hon'ble CESTAT has relied upon Hon'ble Karnataka High Court's ruling, in MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT that there is no requirement in law that the premises should be registered for availing cenvat credit. Conclusion - Substantial benefit cannot be denied because of procedural irregularity. The impugned orders are not sustainable in law therefore set aside - appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the appellant is entitled to avail Cenvat credit on the strength of invoices issued to unregistered branch offices instead of the registered premises.
Whether the denial of Cenvat credit based on procedural irregularities, such as the address on invoices, is justified under the relevant legal framework.
Whether the decisions of previous judicial precedents and high courts regarding procedural irregularities and Cenvat credit are applicable to the present case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Cenvat Credit on Invoices Addressed to Unregistered Branch Offices

Relevant legal framework and precedents: The appellant's entitlement to Cenvat credit is governed by Rule 4A(1) of the Service Tax Rules, 1994, and Rule 9(2) of the Cenvat Credit Rules, 2004. The precedents considered include decisions from various high courts and tribunals, such as C.S.T vs. Kyocera Wireless (India) Pvt. Ltd. and EXL Service.Com India Pvt. Ltd. vs. CCE, which have addressed similar issues.
Court's interpretation and reasoning: The court interpreted that the denial of Cenvat credit solely based on procedural irregularities, such as the address on invoices, is not justified. The court emphasized that the substantive benefit of Cenvat credit should not be denied due to procedural lapses.
Key evidence and findings: The court noted that the appellant maintained full records and that the procedural irregularity did not hinder the verification process by the revenue authorities.
Application of law to facts: The court applied the legal principles established in previous cases, concluding that the appellant's procedural irregularity in addressing invoices does not warrant denial of Cenvat credit.
Treatment of competing arguments: The appellant argued that the denial of credit was unjustified, citing various precedents. The respondent reiterated the findings of the impugned order. The court sided with the appellant, emphasizing the procedural nature of the irregularity.
Conclusions: The court concluded that the appellant is entitled to avail Cenvat credit and that the denial based on procedural grounds is not sustainable.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The court quoted, "Substantial benefit cannot be denied because of procedural irregularity," highlighting the essence of the judgment.
Core principles established: The judgment reinforced the principle that procedural irregularities, such as incorrect addresses on invoices, should not result in the denial of substantive tax benefits like Cenvat credit.
Final determinations on each issue: The court determined that the appellant is entitled to Cenvat credit despite the procedural irregularities concerning invoice addresses. The impugned orders were set aside, and the appeals were allowed with consequential relief.

The judgment effectively underscores the importance of distinguishing between procedural and substantive requirements in tax law, ensuring that procedural lapses do not unjustly deprive taxpayers of their entitlements.

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