Tribunal allows appeal on cenvat credit denial for renting unregistered premises

The Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s decision to deny cenvat credit on service tax paid for renting unregistered premises, based on the lack of nexus with the output service provided by the appellant. The Tribunal found discrepancies in the adjudicating authority's findings and noted that the premises in question appeared to be the same, with different room numbers used interchangeably. Relying on a judicial precedent, the Tribunal held that the cenvat credit against renting premises no. 67 was admissible for the subsequent period.

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Issues: Denial of cenvat credit on service tax paid against unregistered premises taken on rent.

The appellant, a Private Ltd. Company, availed cenvat credit on service tax paid for renting premises no. 67 at Atlanta, Nariman Point, Mumbai, and premises no. 65. However, input credit against premises no. 67 was refused as it was unregistered. The appellant argued that registration of all premises is not mandatory unless it is a branch outside the Head office. The appellant also highlighted that the department itself asked for reversal of cenvat credit for trading goods, which should have implications on the renting of premises. The appellant cited judicial decisions and previous tribunal orders to support the admissibility of the credit against renting unregistered premises.

The department, represented by the ld. AR, supported the Commissioner (Appeals)'s decision, citing Rule 4(2) of the Service Tax Rules, 1994, which mandates the registration of business premises. The department argued that since the premises were not registered and were used as a back office, the cenvat credit for renting such premises is inadmissible. The department sought no interference in the Commissioner (Appeals)'s decision.

After hearing both sides and examining the orders-in-original and judicial decisions submitted, the Tribunal noted discrepancies in the adjudicating authority's findings. The authority confirmed the reversal of credit under Rule 6(3)(1) for dutiable and exempted services, but also stated that renting premises at unit no. 67 had no nexus with the output service provided from unit no. 65. The Tribunal found it unjust to penalize the appellant twice by invoking alternate provisions of the statute. It noted that Rule 4(2) of the Service Tax Rules does not explicitly state that cenvat credit is inadmissible without registration, except for Input Service Distributors (ISD). The Tribunal observed that the appellant's premises seemed to be the same, with different room numbers used interchangeably. Relying on a judicial precedent that found the subsequent period's cenvat credit against renting premises no. 67 admissible, the Tribunal allowed the appeal and set aside the Commissioner (Appeals)'s order.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s decision to deny cenvat credit on service tax paid for renting unregistered premises, based on the lack of nexus with the output service provided by the appellant.

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