2009 (12) TMI 209 - AT - Service Tax

Appeal overturns denial of Cenvat credit on mobile phone services, emphasizing the need for clear business use evidence.

The appeal was allowed, overturning the denial of Cenvat credit on mobile phone services. The appellant successfully demonstrated the intended business ... Cenvat credit on mobile phone services - input service - fringe benefit - burden of proof for exclusive business use - CBEC Circular No. 59/8/2003 - CBEC Circular No. 97/8/2007-STCenvat credit on mobile phone services - burden of proof for exclusive business use - input service - Entitlement to Cenvat credit on mobile phone services where the assessee produced mobile bills and asserted phones were provided to employees for business use only. - HELD THAT: - The Tribunal examined whether the appellant had discharged the burden of establishing that mobile phones were used exclusively for business and therefore qualified as an input service for Cenvat credit. The adjudicating and lower appellate authorities denied credit on the basis that the phones were used for both personal and business purposes and treated provision of phones as a fringe benefit. The Tribunal, on perusal of records and the mobile bills, found no contemporaneous finding or evidence by the adjudicating authority disproving the appellant's assertion that phones were provided for business use. There were no employee statements or other evidence on record showing personal use, and the bills on their face did not demonstrate non-business use. On that basis the Tribunal concluded that the appellant had proved that the mobile phones were given to employees for business purposes and were not shown to be used otherwise. [Paras 7, 8]Cenvat credit availed on mobile phone services is allowed as the appellant proved business use and entitlement to credit.Final Conclusion: The appeal is allowed: the Tribunal set aside the impugned order and permitted the Cenvat credit on mobile phone services on the finding that the assessee established business use and discharged the burden of proof. Issues:Appeal against denial of Cenvat credit on Mobile Phone Services.Analysis:1. The appellant availed Cenvat credit on mobile phone services, which was denied based on CBEC Circular No. 59/8/2003, stating that Service Tax paid on mobile phones services shall not be allowed. A show-cause notice was issued for contravention of Cenvat Credit Rules, 2002. The adjudicating authority held that mobile phones were used for both personal and business purposes, with no control over employee usage. Lack of evidence led to denial of credit.2. The lower appellate authority confirmed the denial, considering mobile phones as a perquisite treated as a 'fringe benefit' like staff car or laptop, not an 'input service'. The appellant contended that mobile phones were in the company's name, bills paid by the company, used exclusively for business by officials, supported by bills. The burden of proof was on the appellant to establish business use, which was not adequately proven.3. The SDR argued that multifarious use of mobile phone services was possible, citing a previous Tribunal decision. Despite potential business use, the appellant failed to demonstrate dedicated business use, leading to denial of Cenvat credit. The Tribunal's decision emphasized the need for clear evidence of business-related mobile phone use.4. The Judicial Member examined submissions and records, finding that the denial was based on lack of control over employee usage. However, after reviewing the bills and lack of employee statements, it was concluded that the appellant had indeed provided mobile phones for business purposes. The appellant successfully proved that the mobile phones were intended for business use, leading to the allowance of Cenvat credit and setting aside the impugned order.In conclusion, the judgment allowed the appeal, overturning the denial of Cenvat credit on mobile phone services due to the appellant's successful demonstration of the intended business use of the mobile phones provided to employees.