2014 (9) TMI 77 - AT - Service Tax

Service Station Wins Tax Credit Appeal: Input Services Qualify for Cenvat

The Tribunal allowed the appellant, an Authorised Service Station, to use cenvat credit for service tax paid on input services for their output service. ... CENVAT Credit - Appellant, authorized dealer of Hero Honda two wheelers, availed credit of tax paid on GTA service, insurance service and telephone services; utilized it for the output service of Authorised Service Station - Revenue viewed the credit inadmissible, adjudicated demand for recovery of irregular credit along with interest and penalty, upheld by Commissioner (Appeals) and agitated herein - Held that:- issue involved in this case stands decided in favour of the Appellant by the Tribunal judgement in case of M/s. Badrika Motors (P) Ltd. reported in [2014 (1) TMI 316 - CESTAT NEW DELHI], which in turn, is based on the Tribunals judgements in the cases of Sri Venkanna Motors Pvt. Ltd. (2009 (3) TMI 877 - CESTAT BANGALORE) and CCE, Tirupathi Vs. Shariff Motors (2009 (3) TMI 155 - CESTAT, BANGLORE). In view of this, the impugned order is not sustainable - Decided in favour of assessee. Issues:Whether the cenvat credit of service tax paid on GTA service, insurance service, and telephone services can be used for payment of service tax on the output service of an Authorised Service Station.Analysis:The appellant, an Authorised Service Station and dealer of motorcycles, disputed the denial of cenvat credit on input services by the jurisdictional Dy. Commissioner. The department contended that these services were mainly used for purchasing, storage, and sale of two-wheelers, not for servicing, leading to a demand of cenvat credit and penalty. The Commissioner (Appeals) upheld this decision, prompting the appeal.The appellant argued citing the Tribunal's judgment in the case of Badrika Motors (P) Ltd., where it was held that cenvat credit of service tax paid on GTA service for transportation of two-wheelers can be used for service tax on output services of servicing two-wheelers. They emphasized that no precise correlation is needed between input and output services, relying on previous judgments. Thus, they claimed the impugned order was unsustainable.The Departmental Representative defended the order, stating the services were related to bringing, storing, and selling new two-wheelers, not the output service of the appellant. They maintained there was no flaw in the impugned order.Upon review, the Tribunal found the issue had been decided in favor of the appellant in the case of Badrika Motors (P) Ltd., based on previous judgments. Consequently, the impugned order was deemed unsustainable and set aside, allowing the appeal in favor of the appellant.In conclusion, the Tribunal's decision favored the appellant, allowing them to utilize cenvat credit for service tax paid on input services for the output service of the Authorised Service Station, based on established legal precedents.