2009 (10) TMI 434 - AT - Service Tax

Cenvat credit of service tax on invoices issued to branch offices with centralized billing upheld; credit permitted on appeal

Cenvat credit of service tax where invoices were in branch office names but payment, billing and accounting were centralized at the registered premises; ... Availment of Cenvat credit on Service tax for input services - Centralised billing and centralised accounting registration under Rule 4(2) of Service Tax Rules, 1994 - Effect of invoices addressed to branch offices on credit entitlement - Application of Cenvat/modvat precedents to Service tax creditAvailment of Cenvat credit on Service tax for input services - Centralised billing and centralised accounting registration under Rule 4(2) of Service Tax Rules, 1994 - Effect of invoices addressed to branch offices on credit entitlement - Application of Cenvat/modvat precedents to Service tax credit - Whether the appellant could avail Cenvat credit of Service tax on invoices addressed to its branch offices when the appellant had centralised billing and centralised accounting and was registered at the centralised premises. - HELD THAT: - The Tribunal found on the facts that the appellants operated a centralised billing and accounting system at the Manipal premises and had taken Service tax registration for advertising services at that address. Rule 4(2) of the Service Tax Rules, 1994 permits an assessee, where there is centralised billing or accounting, to register the premises from which such centralised systems are operated. Given that the appellant was discharging Service tax liability from its registered (centralised) premises, entitlement to Cenvat credit could not be denied merely because the invoices were addressed to branch offices. The Tribunal applied the ratio of earlier decisions dealing with Cenvat/modvat credit on central excise duty (Stadmed Pvt. Ltd. and Gujarat Heavy Chemicals Ltd.) and found those authorities squarely applicable to the present Service tax context. The possibility of verification whether branch offices themselves availed credit was not a valid ground to deny benefit where the registered centralised premises discharged the service-tax liability and payments were made from that premises. [Paras 6, 7, 8, 9]The confirmation of demand, interest and penalties was unsustainable; the impugned order was set aside and the appeal allowed with consequential relief.Final Conclusion: Appeal allowed. The Tribunal held that where an assessee with centralised billing and accounting is registered at the centralised premises, Cenvat credit of Service tax cannot be denied solely because invoices are addressed to branch offices; the impugned order confirming demand and penalties was set aside. Issues: (i) Whether a service provider having centralized billing and centralized accounting and registered at the centralized premises can avail Cenvat credit of service tax paid on invoices addressed to its branch offices.Analysis: The question turns on the interaction between the registration option for premises with centralized billing or accounting under Rule 4(2) of the Service Tax Rules, 1994 and the entitlement to Cenvat credit under the Cenvat Credit Rules, 2004, including the definition of input service. The appellant had centralized billing and accounting at the Manipal premises and had taken service tax registration at that premises. The invoices on which credit was claimed were addressed to branch offices that were not separately registered; payments were made from the registered centralized premises. The rules permit an assessee, at its option, to register the premises where centralized billing or accounting systems are located. Prior Tribunal decisions addressing analogous central excise Cenvat credit issues were applied by analogy to service tax credits where invoices addressed to branch offices were accepted when the registered centralized premises discharged the tax liability and payments originated from the registered premises.Conclusion: The appellant is entitled to avail Cenvat credit of service tax paid on invoices addressed to branch offices where the assessee has centralized billing and accounting and is registered at the centralized premises; the impugned demand is set aside in favour of the assessee.Ratio Decidendi: Where an assessee is registered at premises from which centralized billing or centralized accounting is carried out and the service tax liability is discharged from those registered premises, Cenvat credit on service tax paid may be availed even if invoices are addressed to branch offices not separately registered.