2013 (7) TMI 393 - AT - Service Tax

Appellate Tribunal affirms sales office as Input Service Distributor; denial of credit upheld

The Appellate Tribunal CESTAT Bangalore rejected both appeals filed by the department, upholding the decision that the sales office could be considered an ... Input Service Distributor (ISD) – assessee was an authorized distributor of two and three wheelers - whether the assessee would be covered under the category of input service provider – Held that:-The sales office of the assessee is an office – he being a service provider and that the sales office is an office of the service provider - definition indicated that it is to be an office of the manufacturer or producer of final products - assessee would be entitled for the credit taken by one of the service stations based on the credit distributed by the ISD – appeal decided against the department. Issues:- Appeal against the order of the Commissioner (Appeals) regarding registration as Input Service Distributor (ISD) and credit distribution.Analysis:1. Interconnected Appeals: The department filed two appeals against the orders of the Commissioner (Appeals) dated 23.12.2009, which were interconnected and involved the same respondent. The appeals were heard together and disposed of by a common order.2. Background: The respondent, an authorized distributor for two and three-wheelers, took registration as ISD for their sales office at M.G. Road, Vijayawada. The original authority revoked the registration, leading to the denial and recovery of service tax credit distributed to an authorized service station.3. Legal Definition: The definition of Input Service Distributor under Rule 2(m) of CENVAT Credit Rules, 2004 was crucial. It specifies that an ISD must be an office of the manufacturer or producer of final products or provider of output service, receiving and distributing service tax credit.4. Reasoning and Decision: The Tribunal analyzed the definition and concluded that the sales office of the respondent, being an office of the service provider, could qualify as an ISD. Therefore, the Commissioner (Appeals) was correct in treating the sales office as an ISD, and the denial of credit to the service station based on this distribution was deemed valid.5. Judgment: The Tribunal rejected both appeals filed by the department, upholding the decision that the sales office could be considered an ISD, and the denial of credit was not irregular. The judgment was pronounced and dictated in open court, settling the matter in favor of the respondent.This detailed analysis of the legal judgment highlights the issues, background, legal definitions, reasoning, and final judgment delivered by the Appellate Tribunal CESTAT Bangalore in the case involving the registration as Input Service Distributor and credit distribution.