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2025 (4) TMI 1189 - AT - Service TaxAvailment of Cenvat credit on Service Tax paid on rent for a business premises (Himalaya Crown Apartment) that was not included in the appellant s ST-2 registration certificate - input services or not - HELD THAT - On carefully going through the decision of this Tribunal in the case of 24/7 Customer Pvt. Ltd. 2013 (12) TMI 257 - CESTAT BANGALORE it is understood that this Tribunal had allowed Cenvat credit of Service Tax paid to said appellants for Gurgaon office for the period for which Gurgaon office was not registered. Following the said precedent decision the appellant is entitled for disputed Cenvat credit of Rs. 2, 35, 500/-. Conclusion - The appellant is entitled to the disputed Cenvat credit on rent paid for the unregistered premises. The impugned order is set aside - appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this case are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to Cenvat Credit on Rent Paid for Unregistered Premises Relevant legal framework and precedents: The Cenvat Credit Rules govern the availment of credit on input services used for providing output taxable services. The appellant relied heavily on the Karnataka High Court ruling in mPortal India Wireless Solutions Pvt. Ltd., which held that there is no statutory provision mandating registration of each individual premises as a condition precedent for availing Cenvat credit. This ruling was further followed by this Tribunal in the case of 24/7 Customer Pvt. Ltd., which allowed Cenvat credit on Service Tax paid on rent for an unregistered office premises. Court's interpretation and reasoning: The Tribunal examined the facts that the appellant was a registered service provider with a centralized registration certificate for the premises at Shree Ram Shyam Tower, Nagpur. The disputed credit related to Service Tax paid on rent for the Himalaya Crown Apartment, which was used for providing output services but was not listed in the ST-2 registration certificate. The Tribunal noted that the lower authorities denied credit solely on the ground that the premises was not registered under ST-2. The Tribunal relied on the reasoning of the Karnataka High Court in mPortal that the Cenvat Credit Rules do not prescribe registration of each premises as a mandatory condition for credit. The Tribunal reproduced paragraph 5 of the 24/7 Customer Pvt. Ltd. order, which emphasized that the absence of a statutory provision requiring registration of each premises means that denial of credit on this ground is unsustainable. Key evidence and findings: The appellant had paid Service Tax on rent for the disputed premises, which was used for providing taxable output services. The premises was not registered in the ST-2 certificate, but the appellant had a centralized registration covering other premises. Application of law to facts: Applying the legal principle from mPortal and the Tribunal's precedent in 24/7 Customer Pvt. Ltd., the Tribunal found that the appellant's entitlement to Cenvat credit could not be denied merely because the premises was not separately registered. The centralized registration sufficed under the law. Treatment of competing arguments: The Revenue argued that since the premises was not included in the ST-2 registration, the credit was inadmissible. The Tribunal rejected this argument, holding that no statutory provision supports such a restriction. Conclusion: The appellant was entitled to the disputed Cenvat credit of Rs. 2,35,500/- on rent paid for the unregistered premises. Issue 2: Legality of Penalty Imposed for Availing Disallowed Cenvat Credit Relevant legal framework and precedents: Penalties under the Service Tax regime are generally imposed when Cenvat credit is wrongly availed. However, if the credit is legitimately claimed as per law, penalty cannot be sustained. Court's interpretation and reasoning: Since the Tribunal held that the appellant was entitled to the credit, the penalty imposed for availing the credit was not justified. The denial of credit by the lower authorities was based on an erroneous interpretation of the law. Key evidence and findings: The penalty was imposed alongside denial of credit. The Tribunal's acceptance of credit entitlement negates the basis for penalty. Application of law to facts: The penalty being contingent on wrongful availment of credit was set aside as the credit was rightly availed. Treatment of competing arguments: The Revenue supported the penalty, but the Tribunal found no legal basis to uphold it. Conclusion: The penalty imposed was unsustainable and was set aside along with the denial of credit. 3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning is encapsulated in the reproduced paragraph from the 24/7 Customer Pvt. Ltd. order, which states: "Insofar as requirement of registration with the department, as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat credit rules which impose such restrictions. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assesse is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside." The core principle established is that under the Cenvat Credit Rules, registration of each individual premises is not a mandatory precondition for availing Cenvat credit on input services such as rent. A centralized registration certificate suffices for the purpose of credit availment. The Tribunal's final determinations are:
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