2009 (3) TMI 37 - AT - Service Tax

Tribunal upholds credit for mobile phone bills in construction services case. Full-time directors' business use supported.

CCE, Raipur Versus M/s. BSBK. Pvt. Limited

The Tribunal upheld the Commissioner (Appeals)' decision to allow the credit on mobile phone bills claimed by the respondent company engaged in Industrial ... Credit on mobile phone used in providing Industrial Construction service denied on ground that mobile phone bills were not issued in the name of the respondent company – revenue submits that mere payment of bills by the respondents does not imply that the services have been utilized by the respondent company for business activities – since mobile phones were utilized by the full time directors of the company for business purposes which were not negated by the Revenue, credit allowed Issues:Revenue appeal against disallowed credit on mobile phone bills by Commissioner (Appeals).Analysis:The case involves the Revenue appealing against the Order-in-Appeal passed by the Commissioner (Appeals) regarding the disallowed credit on mobile phone bills claimed by the respondent company engaged in providing taxable service of Industrial Construction. The dispute arose as the bills were not issued in the name of the respondent company but in the name of its staff and employees. The original authority disallowed the credit and imposed a penalty, which was set aside by the Commissioner (Appeals), leading to the Revenue filing the appeal.The Revenue contended that as per Rule 2(l) of CENVAT Credit Rules, 2004, credit is eligible only for services used in relation to business activities. They argued that since the mobile phones were used by employees for personal purposes, the respondent company should not be eligible for the credit. The Revenue also emphasized that payment of bills does not automatically imply that services were utilized for business activities, and the respondent failed to prove the services were used in relation to business activities.On the other hand, the respondent's advocate reiterated the Commissioner (Appeals)' findings, stating that the bills were paid by the respondent company and the mobile phones were indeed used for business activities. They referenced decisions from the Hon'ble Gujarat High Court and the Tribunal to support their argument. The advocate also highlighted that the demand for tax was time-barred.Upon review, the Tribunal observed that the mobile phones were used by the full-time directors of the respondent company for business purposes. The Tribunal noted that the bank statements confirmed payment of the bills by the respondent company. Referring to the decisions cited by the respondent, the Tribunal found no evidence to suggest that the activities carried out were unrelated to business activities. The Tribunal also noted that the Revenue did not refute the respondent's claim that the mobile phones were used for business activities.The Tribunal agreed that mere payment of bills does not establish utilization of services for business activities. However, in this case, since the mobile phones were used by the directors for business purposes, and this fact was not contradicted by the Revenue, the Tribunal found no grounds to interfere with the Commissioner (Appeals)' order. Consequently, the appeal filed by the Revenue was rejected.