2024 (12) TMI 665 - AT - Central Excise

CENVAT credit allowed for business services when providers paid tax, denied for invoices in sister concerns' names

CESTAT Ahmedabad allowed majority of CENVAT credit claims in this service tax case. The tribunal held that credit cannot be denied at recipient's end when ... CENVAT Credit - input services - Business Support Service - Management Consultancy Service - Guest House Service - Event Management Service - Outdoor Catering Service - Commercial or Industrial construction Service - Real estate Service - credit claimed on photocopy of invoices and invoices issued on Bangalore address, but credit claimed at Ahmedabad - Credit availed without valid documents - Credit availed on invoices with different address. Credit on Business Support Service - demand has been confirmed in the impugned order holding that there needs to be a service provider and a service receiver providing services as described in the definition of Business Support Service, in return of a consideration - HELD THAT:- The issue is not res-integra in as much as the Tribunal in the case law relied upon by the appellant in the matter of M/S AMARA RAJA POWER SYSTEMS LTD. & ANOTHER. & M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C&C. E, TIRUPATHI [2015 (12) TMI 1558 - CESTAT HYDERABAD] has decided in the favour of the assessee and held that 'The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient’s end, alleging that no service has been provided.' When ARBL and MPPL have paid service tax under the category of BAS/BSS, the strong inference that can be drawn is that they have provided services as per the invoices raised by them. Revenue has not been able to adduce any evidence that there is no service rendered. The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient’s end, alleging that no service has been provided - thus, it is now settled law irrespective of the fact whether or not the impugned service was eligible to Cenvat Credit in any matter where the question involved is whether or not the impugned service/ inputs were liable to tax, if the tax paid by the service provider/ supplier of inputs is not questioned at the end of service provider/ supplier of inputs, the same cannot be challenged at the recipient’s end - Credit allowed. Credit on Management Consultancy Service - HELD THAT:- The issue is not res-integra as the same has already been decided in the assessee’s favour by coordinate bench of this Tribunal in the matters of PAREKH PLAST (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [2011 (6) TMI 595 - CESTAT, AHMEDABAD], MODERN PETROFILS VERSUS COMMISSIONER OF C. EX., VADODARA [2010 (7) TMI 319 - CESTAT, AHMEDABAD], that when the invoices are in the name Head Office, the credit cannot be denied to the unit where the services have been utilized. It is further found from the invoices produced by the appellant that in the invoices raised by the service providers, the service provided to the appellant unit has been separately mentioned - Further, it is already a settled law that the credit cannot be denied merely on the ground that the assessee had taken credit on photo-copies, where the veracity of credit itself was not disputed. Thus, the credit of Rs. Rs. 91,43,339/- impugned in the appeal has been correctly availed by the appellant and the impugned order is set aside on this count. Credit claimed on photocopy of invoices and invoices issued at different address- Rs. 47,85,079/- - HELD THAT:- It has already been held that the Cenvat credit cannot be disallowed on these grounds. Accordingly, the demand on this count is quashed. Credit claimed without valid documents - HELD THAT:- The coordinate bench of this unit in the matter of PIRAMAL GLASS PVT LTD VERSUS C.C.E. & S.T. -SURAT-I [2021 (9) TMI 1198 - CESTAT AHMEDABAD] has already decided that the claim cannot be denied if the credit on common services has entirely been used in one unit. There is no allegation in the impugned order that the impugned services were not eligible for Cenvat credit. The credit cannot be denied to the appellant merely for the reason that the GAR -7 challan is in the name of Bangalore unit, which is also their head office. Credit on Guest House Service - HELD THAT:- The term ‘input service’ contained in Cenvat Credit Rules, 2004, contains certain exclusion clause. Clause (C), inter alia, excludes travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail Cenvat credit thereof. This, even Assessee does not dispute. The case of the Assessee, however, is that, none of the guest houses were used for the personal use or consumption of the employees. In order to test this premise, Tribunal itself formulated the test that those guest houses which are situated next to the manufacturing unit of the Assessee, would qualify for the benefits - even the coordinate bench of this Tribunal has held the Cenvat credit on Guest House service eligible in the case law MAFATLAL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, AHMEDABAD [2020 (6) TMI 61 - CESTAT AHMEDABAD] cited by the appellant. Accordingly, Cenvat credit on this ground is allowed and impugned order is set aside. Credit on Event Management Service - HELD THAT:- Revenue has no locus-standi to deny the Cenvat credit in de-novo proceedings. Accordingly, Impugned order is set aside on this ground. Credit availed on invoices with different address - HELD THAT:- On going the through the invoices, it is found that some of the invoices have been raised in the name of units which are their sister concerns but have different identity. Accordingly, it is held that only invoices which are in their own name or their Bangalore Head Office are eligible for Cenvat credit. Cenvat Credit on other invoices is disallowed. The appellant will produce the necessary documents for verification. The Cenvat credit taken against the invoices which do not pertain to them, or their head office cannot be considered to be bonafide and accordingly, the appellant will also pay the applicable interest and equal penalty under Section 78 of the Finance Act, 1994. Outdoor catering Service - HELD THAT:- The appellant has engaged services of outdoor catering to their employees and submitted that as their factory is located 35 km away from the city. that there are no eating arrangements around factory area and hence they availed the service of outdoor catering to provide food to the employees. However, the Cenvat credit on these services was denied on the ground that the services provided was only a welfare activity and no nexus to the manufacturing activity - the impugned order is set aside. Credit on Commercial or Industrial Construction Service - HELD THAT:- The appellant has submitted that they have already reversed the demand of Rs. 22,590/- confirmed in the order. However, the appellant will be required to pay the interest applicable under Section 75 and penalty under Section 78 of the Finance Act, 1994 if not paid earlier. Credit on Real estate Service - it has been alleged that this real estate service has no nexus to the business activity - HELD THAT:- The matter has already been decided in favour of the assessee by CESTAT Mumbai bench in the case of DBOI GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [2016 (11) TMI 521 - CESTAT MUMBAI] holding that real estate services for leasing renting etc. are related to business activities. Accordingly, the impugned order set aside on this ground. The demand of Cenvat credit of Rs 1,01,671 availed on invoices with different address and the demand of Rs. 2,590 on account of Commercial or Industrial Service is confirmed - Rest of the demands as raised in the impugned order-in-original is set-aside. The impugned order-in-original is modified to the above extent and the appeals are disposed of. Issues Involved:1. Credit on Business Support Service2. Credit on Management Consultancy Service3. Credit claimed on photocopy of invoices and invoices issued at different addresses4. Credit claimed without valid documents5. Credit on Guest House Service6. Credit on Event Management Service7. Credit availed on invoices with different addresses8. Credit on Outdoor Catering Service9. Credit on Commercial or Industrial Construction Service10. Credit on Real Estate ServiceIssue-wise Detailed Analysis:1. Credit on Business Support Service:- The appellant entered into an agreement with a sister company to share resources and costs for achieving synergetic benefits. The demand was confirmed, holding that merely sharing expenses does not constitute a service eligible for Cenvat credit. The appellant argued that tax was paid and accepted by the service provider, thus credit should not be denied. The Tribunal found that the issue was not res-integra and allowed the credit, citing previous judgments where similar arrangements were considered input services.2. Credit on Management Consultancy Service:- The credit was disallowed due to invoices addressed to a different unit and availed on photocopies. The appellant argued that the services had a nexus with business activities and that challans were valid documents for credit under reverse charge. The Tribunal noted that the issue was not new and had been decided in favor of the assessee in previous cases. The credit was allowed, as invoices were in the name of the appellant's unit and original invoices were produced during adjudication.3. Credit claimed on photocopy of invoices and invoices issued at different addresses:- The credit was claimed based on photocopies and invoices issued to the head office. The Tribunal held that credit cannot be denied on these grounds, quashing the demand.4. Credit claimed without valid documents:- Credit was claimed on invoices in the name of other units. The Tribunal found no allegation that services were ineligible for Cenvat credit and allowed the credit, referencing prior decisions that permitted credit claims across units of the same company.5. Credit on Guest House Service:- Credit was denied on the basis that guest house services were welfare activities. The appellant argued that the guest house was for professionals involved in setting up the factory. The Tribunal found a nexus with business activities, allowing the credit, as it was akin to hotel expenses, which are eligible for credit.6. Credit on Event Management Service:- Credit was allowed in earlier proceedings and not challenged by Revenue. The Tribunal set aside the impugned order on this ground, as Revenue had no locus standi to deny credit in de-novo proceedings.7. Credit availed on invoices with different addresses:- Credit was claimed on invoices raised to other units. The Tribunal allowed credit only for invoices in the appellant's or head office's name, disallowing others and requiring the appellant to pay applicable interest and penalties.8. Credit on Outdoor Catering Service:- Credit was denied as catering was deemed a welfare activity. The Tribunal referenced a favorable decision in the appellant's case at another location and set aside the impugned order, allowing the credit.9. Credit on Commercial or Industrial Construction Service:- The appellant reversed the demand but was required to pay applicable interest and penalties. The Tribunal confirmed the demand for this credit.10. Credit on Real Estate Service:- Credit was denied as real estate services were considered unrelated to business activities. The Tribunal referenced a favorable decision from another bench, setting aside the impugned order and allowing the credit.Conclusion:The Tribunal modified the impugned order, confirming the demand for credit availed on invoices with different addresses and for Commercial or Industrial Construction Service, while setting aside the rest of the demands. The appeals were disposed of in terms of the modifications.