Cenvat credit on reverse-charge service tax was allowed on GAR-7 challans without ISD distribution for unit-specific services.

Cenvat credit on service tax paid under reverse charge was held admissible on the strength of GAR-7 challans issued under centralized registration, because the input services were received only by one unit and the invoices stood in that unit's name. Rule 9(1)(e) treated the challans as valid credit documents, and the Input Service Distributor route was held inapplicable since the services were not common to multiple units. The absence of ISD distribution was a procedural defect that could not defeat otherwise admissible credit.

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Issues: Whether the appellant was entitled to avail Cenvat credit on service tax paid under reverse charge mechanism on the strength of GAR-7 challans issued under its centralized registration, without distribution of credit through the Input Service Distributor route.

Analysis: The input services were received only by the Mohali unit and the invoices stood in its name. The service tax was paid by the appellant through its centralized registration, and the challans evidencing such payment were treated as valid documents for credit under Rule 9(1)(e) of the Cenvat Credit Rules, 2004. The requirement of distribution through an Input Service Distributor was held inapplicable because the services were not common input services availed by multiple units. The non-registration or non-distribution objection was treated as a procedural defect that could not defeat otherwise admissible credit.

Conclusion: The appellant was rightly entitled to the Cenvat credit, and denial of credit on the ground of absence of ISD distribution was unsustainable.

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