2023 (11) TMI 472 - AT - Service Tax

CENVAT credit cannot be denied for incorrect service descriptions when service provider used recipient's prescribed invoice format

M/s. Tata AIG General Insurance Co. Ltd. Versus Commissioner of Service Tax-VI, Mumbai And M/s. Tata AIG General Insurance Co. Ltd. Versus The Principal Commissioner of CGST & CX, Mumbai East

The CESTAT Mumbai held that CENVAT credit cannot be denied merely due to incorrect service descriptions in invoices when the service provider used formats ... CENVAT Credit - denial on the ground of incorrect description of services in the invoices raised by the service provider - Non-opening of assessment of the provision of service extended by the service provider - HELD THAT:- In the instant case the motor vehicle dealer as an agency was providing services to the Appellant and raising invoices with description of services as per the format provided to it by the Appellant through email. The contract copy filed in response to the summons issued for appearance is not in respect of M/s. Anamallais Motors Pvt. Ltd. who issued the invoices and whose proprietor Smt. A. Umadevi is the authorised insurance agent for the Appellant but Appellant claims that agreements entered with car dealers, including the copy of agreement dated 01.11.2012 signed with M/s Unic Automobile (MAH) Pvt. Ltd. (copy filed) are by and large containing same provisions. It is further noticed that the said agreement annexed to the appeal memo as Annexure-4 doesn’t contain provision for payment against such services and the modalities of such payment, which Respondent-Department has linked to the number of insurance policies sold but if the same is treated as service received from the car dealers against which Service Tax liability was discharged by the car dealers and the same remained undisputed, there is no point in the denying credits to the Appellant who had availed those services to sale its car insurance policies and this being a separate transaction it is immaterial as to who received commission against generation of a car insurance policy by availing such services. The same fact is also applicable in respect of retainer/retailers who also had provided certain services to the Appellant. The issue is no more res integra that without opening assessment of the provision of service extended by the service provider, CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver in order to avail the input services. Appeal allowed. Issues involved:Denial of CENVAT Credit at the receiver's end due to incorrect description of services in invoices raised by the service provider.Summary:The appeal challenges the denial of CENVAT Credit based on incorrect service descriptions in invoices. The Appellant, engaged in general insurance services, received infrastructure and support services from motor car dealers. A show-cause notice was issued, denying CENVAT Credit for a specified period, which was confirmed in two orders. The Appellant argued that despite incorrect service descriptions, the nature of the transactions remained valid. They cited legal precedents and decisions to support their claim. The Respondent-Department contended that due to incorrect descriptions, credits were rightly denied. The Tribunal examined the case records and agreements with car dealers, concluding that credits cannot be denied without assessing the service provider. Therefore, both appeals were allowed, setting aside the orders with consequential relief.Judgment Details:The Appellant availed CENVAT Credit for services received from motor car dealers, despite incorrect service descriptions in invoices. The Commissioner denied credits based on this discrepancy, linking payments to the number of vehicles sold and insured, rather than infrastructure or business support services. The Tribunal found that the services provided by the car dealers were utilized by the Appellant to sell insurance policies, and the Service Tax liability was discharged by the dealers. Without assessing the service providers, denying credits to the recipient was deemed unjustified. Citing legal precedents, the Tribunal allowed both appeals, setting aside the Commissioner's orders.Separate Judgment:No separate judgment was delivered by the judges in this case.