Tribunal allows Cenvat credit for service tax on software & auditors' services.

The Tribunal ruled in favor of the appellant in a case involving denial of Cenvat credit for service tax paid on software purchased from a consultant. The denial based on categorization discrepancies in the appellant's records was deemed unjustified as there was no dispute about tax payment. Similarly, denial of credit for service tax paid by auditors during income tax return filing was overturned, as it was considered directly connected to the appellants' business activities and qualified as an input service. The appeal was allowed, and consequential relief was granted to the appellant.

---

---

Issues:
1. Denial of Cenvat credit for service tax paid on software purchased from a consultant.
2. Dispute regarding the categorization of service in records as IT service.
3. Denial of credit for service tax paid by auditors during filing of income tax returns.

Analysis:
1. The appellant was denied Cenvat credit of &8377; 72,676 for service tax paid on software purchased from a consultant registered as a Management Consultant. The Revenue contended that as IT service did not exist during the relevant period, the credit availed by the appellant was incorrect. The appellant categorized the service as IT service in their records. The Tribunal held that denial of credit solely based on the categorization in the appellant's records was unjustified, as there was no dispute about tax payment and deposit by the service provider. The denial was set aside.

2. The advocate argued that the service tax was paid by the consultant registered as a Management Consultant for software purchased, not for IT services as recorded by the appellant. The Tribunal agreed with the advocate's contention, emphasizing that the actual tax payment and deposit to the State Exchequer were not in question. Therefore, the denial of credit based on the categorization discrepancy was deemed unjustifiable, leading to the reversal of the denial.

3. Another issue arose regarding the denial of credit for service tax paid by auditors during the filing of income tax returns of the appellants. The denial was based on the grounds that it did not fall under the definition of input service. However, the Tribunal found that filing income tax returns was directly connected to the appellants' business activities and, therefore, qualified as an input service. The service tax paid by auditors for filing IT returns was considered to have a nexus with the business operations, making it eligible for credit. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant.

---