2023 (7) TMI 204 - AT - Service Tax

Cenvat credit for tripartite dealer services allowed where services qualify as input service and exclusions are absent

Tripartite agreements between the service recipient, dealers and insurer establishing dealers' role and services render the invoices admissible for cenvat ... CENVAT Credit - Tripartite Agreement is made for the dealer to provide space, infrastructure, manpower etc., to enable the Appellant to seek insurance business for the Insurance company - whether for such services provided by the dealers, TBSS would be eligible for cenvat credit or not ? - HELD THAT:- There is no dispute that the Appellant, the car dealer and the insurance company have entered into Tripartite Agreement at the very first stage. These Agreements have been entered into much before the investigation/enquiries were initiated. Therefore, there is nothing to indicate that the veracity of such documents is liable to be questioned. This Agreement clarifies role of the car dealer and the acceptance letter from their side shows the details of activities being undertaken by them. Subsequent to 01.07.2012, the Invoices raised by any service provider need not specify as to under what category of service they are providing the services. In respect of the service recipient also so long as the service falls within the definition of input service in terms of Rule 2(l) of CCR 2004, they would be eligible to take the cenvat credit. The only condition being that the input service should not be under the exclusion list. There is also no allegation that the Show Cause Notice to the effect that the services rendered under these invoices are not falling within the definition of Rule 2(l) of the CCR 2004. The entire case has been built on the ground that absolutely no service was rendered by the car dealers. For coming to this conclusion, the Department has relied upon only two Recorded statements of the dealers out of more than 100 dealers of the Appellant. Even these two officials have given a different version when they were cross examined. In such a case no evidentiary value can be placed on the Recorded Statements of these officials. Further there is no allegation coming up in the Show Cause Notice that TBSS have not recorded the transactions with car dealers in their books of accounts. Reliance placed in the case of M/S. MODULAR AUTO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2018 (8) TMI 1691 - MADRAS HIGH COURT] where it was held that Therefore, unless and until the assessment made on BIL was revised, which obviously could have been done, at this juncture, on account of the expiry of the period of limitation, the interpretation given by the Commissioner (Appeals) as well as the Tribunal with regard to the nature of invoice raised on the assesses is unsustainable. In the case of M/S. CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD. VERSUS THE COMMISSIONER OF G.S.T. & CENTRAL EXCISE, CHENNAI [2021 (3) TMI 24 - CESTAT CHENNAI] it was held that unless and until the assessment made by the dealer is revised, the credit at the recipient’s end cannot be denied. From the above decisions, it is seen that on identical issue various coordinate Benches of this Tribunals have held that the assesses therein are eligible to take the cenvat credit - the Appellant is eligible to take the cenvat credit on the invoices raised by various car dealers, distributors for the services provided by them - appeal allowed. Issues Involved:1. Legality of cenvat credit taken by the Appellant.2. Validity of Recorded Statements as evidence.3. Applicability of previous judgments on similar issues.Summary:1. Legality of cenvat credit taken by the Appellant:The Appellant, a Business Process Outsourcing Company providing Third-Party Administrator (TPA) services, entered into Tripartite Agreements with insurance companies and automobile dealers. The dealers provided infrastructure and manpower support, for which they raised invoices including Service Tax. The Appellant took cenvat credit for the Service Tax paid. The Department issued a Show Cause Notice alleging that no actual services were rendered by the dealers and that the transactions were merely on paper, thus questioning the legality of the cenvat credit taken. The Adjudicating Authority confirmed the demand along with interest and penalty.2. Validity of Recorded Statements as evidence:The Appellant cross-examined the officials whose statements were relied upon by the Department. During the cross-examination, the officials confirmed that services were indeed provided, including the use of manpower, internet, and computer systems for generating insurance policies through the Appellant's portal. The Appellant argued that these cross-examinations disproved the initial statements and thus, the Recorded Statements had no evidentiary value. The Tribunal found that the Tripartite Agreements and the invoices issued by the dealers were authentic and accounted for, and there was no allegation that the services rendered did not fall within the definition of input service under Rule 2(l) of CCR 2004.3. Applicability of previous judgments on similar issues:The Appellant cited several case laws, including M/s. Cholamandalam MS General Insurance Co. Ltd., ICICI Lombard General Insurance Company Ltd., and M/S. Bajaj Allianz General Insurance Co. Ltd., where it was held that if the Service Tax paid by the service provider is not questioned, the cenvat credit taken by the recipient cannot be denied. The Tribunal noted that in all these cases, the proceedings were initiated by the same investigating authority (DGCEI Chennai) and the issues were identical. The Tribunal concluded that the present appeal was squarely covered by these decisions, and thus, the Appellant was eligible to take the cenvat credit on the invoices raised by the car dealers.Conclusion:The Tribunal set aside the impugned Order-in-Original and allowed the appeal, holding that the Appellant is eligible to take the cenvat credit on the invoices raised by various car dealers and distributors for the services provided by them.