Appellate Tribunal CESTAT ruling: Cenvat credit on input services pre-registration allowed

The Appellate Tribunal CESTAT New Delhi ruled in the case of M/s. J. P. Kenny Ltd. that cenvat credit on input services before service tax registration is eligible, following a precedent. The denial of credit for housekeeping and hotel services outside office premises was deferred for further consideration during the regular hearing, with a directive for the appellant to deposit the disputed amount. The Tribunal ordered a stay on recovery pending the appeal's disposal, showing a cautious approach towards the issue of cenvat credit eligibility for services outside office premises.

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Issues Involved:
1. Eligibility of cenvat credit on input service prior to service tax registration.
2. Denial of cenvat credit for housekeeping services and hotel charges outside office premises.

Analysis:

Issue 1: Eligibility of cenvat credit on input service prior to service tax registration:
The appellant, M/s. J. P. Kenny Ltd., filed a stay application seeking waiver of pre-deposit and stay against service tax of Rs.6,95,390/- confirmed by the Commissioner of Service Tax, New Delhi. The issue pertains to the eligibility of cenvat credit for service tax paid on input services prior to obtaining service tax registration by the appellant. The Tribunal referred to a previous case, M/s. Reliance Ports and Terminals Ltd. vs. CCE, Rajkot, where it was held that cenvat credit taken on invoices received before service tax registration cannot be denied solely on the ground of non-registration during the relevant period. The Tribunal found that the appellant has a prima facie good case regarding this issue, indicating a favorable stance towards the appellant's eligibility for cenvat credit in this context.

Issue 2: Denial of cenvat credit for housekeeping services and hotel charges outside office premises:
The second issue revolves around the denial of cenvat credit amounting to Rs.47,182/- to the appellant for housekeeping services and hotel service charges provided in a residential colony located outside the office premises. The Tribunal acknowledged that this issue is arguable in nature and decided that it will be addressed during the regular hearing of the appeal. As a directive, the Tribunal instructed the appellant to deposit the aforementioned amount within four weeks. Upon compliance with this directive, the Tribunal ordered a stay on the recovery of the remaining dues until the appeal is disposed of, with a reporting deadline set for August 16, 2013. This decision reflects the Tribunal's cautious approach to the issue, opting to defer a final judgment on the eligibility of cenvat credit for services provided outside the office premises.

In conclusion, the judgment by the Appellate Tribunal CESTAT New Delhi in the case of M/s. J. P. Kenny Ltd. addresses the two main issues of eligibility for cenvat credit on input services prior to service tax registration and the denial of credit for specific services provided outside the office premises. The Tribunal's decision indicates a favorable inclination towards the appellant's eligibility for cenvat credit based on the precedent set in a previous case, while deferring a final decision on the disputed credit for services provided outside the office premises pending further deliberation during the regular hearing of the appeal.

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