Appellate Tribunal grants cenvat credit for consultancy fees on project report preparation The Appellate Tribunal CESTAT Bangalore allowed the appeal, granting the appellant the benefit of cenvat credit for service tax paid as consultancy fees ...
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Appellate Tribunal grants cenvat credit for consultancy fees on project report preparation
The Appellate Tribunal CESTAT Bangalore allowed the appeal, granting the appellant the benefit of cenvat credit for service tax paid as consultancy fees to M/s. NABARD for preparing a project report on maize processing and dairy units. The Tribunal held that the services obtained were related to setting up a part of the factory, falling under the definition of "input services." The judgment referenced a Bombay High Court decision, clarifying that activities related to business operations, including project report preparation, are eligible for cenvat credit. The demand raised under a longer period of limitation was deemed barred due to the appellant's transparent credit availing process.
Issues: Denial of cenvat credit for service tax paid as consultancy fees to M/s. NABARD for preparation of project report.
In this judgment by the Appellate Tribunal CESTAT Bangalore, the appellant was denied the benefit of cenvat credit amounting to &8377; 97,920/- for service tax paid as consultancy fees to M/s. NABARD for preparing a draft project report for maize processing and dairy units. The Revenue proposed to deny the credit on the grounds that it did not fall under the definition of "input services." However, after considering both sides, the Judicial Member found that the services obtained from NABARD for the project report were related to setting up a part of the factory, which falls under the definition of "input services." The judgment referenced the Hon'ble Bombay High Court decision in Coca Cola India Pvt. Ltd. Vs. CCE, Pune-III, which clarified that the term "business" encompasses all activities related to the functioning of a business, not just limited to manufacturing. Therefore, the project report preparation was deemed to be in relation to the appellant's business and setting up of a factory, making it eligible for cenvat credit.
Additionally, the judgment addressed the issue of the demand being raised under the longer period of limitation. It was noted that the appellant had availed the credit transparently by reflecting it in statutory records and monthly returns, without any malafide intent. As a result, the demand was considered to be barred by limitation. Consequently, the appeal was allowed on both merit and limitation, granting relief to the appellant.
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