Tribunal grants waiver for denial of service tax credit on after sales service under Cenvat Credit Rules The Tribunal granted the applicant's request for waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 2,59,72,450. The dispute arose from ...
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Tribunal grants waiver for denial of service tax credit on after sales service under Cenvat Credit Rules
The Tribunal granted the applicant's request for waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 2,59,72,450. The dispute arose from the denial of credit of service tax paid by the service provider for after sales service during the warranty period. The Tribunal considered the after sales service as falling within the definition of an input service under the Cenvat Credit Rules, 2004, leading to the waiver of pre-deposit and stay of recovery pending appeal.
Issues: Application for waiver of pre-deposit of duty, interest, and penalty u/s Cenvat Credit Rules, 2004 based on denial of credit of service tax paid by service provider for after sales service during warranty period.
Summary: The applicant filed an application seeking waiver of pre-deposit of duty amounting to Rs. 2,59,72,450, interest, and penalty, as the demand was confirmed due to denial of credit of service tax paid by the service provider for providing after sales service during the warranty period. The main contention was whether the after sales service activity could be considered as an input service, as the credit was denied on the basis that it was a post-manufacturing activity.
The applicant argued that the after sales service activity was part of their contractual obligation with the customer and should be considered as an input service, falling within the definition provided under Rule 2(1) of the Cenvat Credit Rules, 2004. They cited precedents where similar demands were contested and pre-deposit was waived by the Tribunal and High Court.
On the other hand, the Revenue contended that since the TVs were already manufactured and cleared before the service tax was paid by the service provider, the activity could not be classified as an input service.
After considering the arguments, the Tribunal found that the applicant, being the recipient of the taxable service, had a strong case for waiver of pre-deposit based on the definition of input service provided in the Cenvat Credit Rules, 2004. Therefore, the pre-deposit of duty, interest, and penalty was waived, and recovery was stayed during the appeal process. The stay petition was allowed.
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