TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 665
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....e) Credit on Guest House Service - Rs. 2,30,757/- (f) Credit on Event Management Service - Rs. 1,97,306/- (g) Credit availed on invoices with different address - Rs. 1,01,671/- (h) Credit on Outdoor Catering Service - Rs.58,278 (i) Credit on Commercial or Industrial construction Service -Rs. 22 590/-. (j) Credit on Real estate Service - Rs. 2,673/- 2. At the outset Shri Archit Agarwal, Learned Advocate appearing on behalf of the appellant has raised a preliminary objection that allegation in the Show Cause Notices are that the credit does not have any nexus with output services. However, the order has confirmed demand on other grounds including credit taken on ineligible documents like not in the name of the appellant or on photocopies. Hence, order is beyond the scope of Show Cause Notice. However, we are not inclined to accept this ground as the show cause notice has clearly alleged that the impugned service does not fall in the definition of "input service" and accordingly, to prove the eligibility, the onus lies upon the assessee to show that not only the impugned services were eligible for Cenvat credit but the credit has been taken on valid documents which are elig....
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....ccounting principles. These charges shall also include cost of resources, salary costs and travel expenses of the personnel engaged in the performance of the work described jn the Agreement. d) The fees payable by each party will be determined on pro rata basis according to allocation key as a portion of the total actual service costs incurred by respective parties. The allocation Key will be based on a weight average method using combination of parameter for each different type of service rendered." The 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. From the agreement, it only appears that M/S. SKF India and the Appellant simply agreed to share some common expenditures. The mere fact that service tax has been paid on the amount transferred from one unit to another does not make any transaction an input service. As discussed in the foregoing paragraph, to qualify as an input service, the activity must have nexus with the business of the Appellant. The nearest conclusion that can be construed from th....
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....endered by ARBL and MPPL to the appellants. That the arrangement is merely sharing of common expenses. Undisputedly, the department was collecting service tax for all these years, from ARBL and MPPL who are registered with the Service Tax Department. The department was very well aware of the impugned activity of ARBL and MPPL while paying service tax under BAS, BSS and other category of services. They were filing ST-3 returns in this regard and no objection has been raised by the department against such payment of service tax. Without raising any objection at the end of service provider, and after having accepted the tax, as well as the returns, the allegation is now raised at the end of the service recipient that credit cannot be taken since there is no rendering of services at all. In this regard it would be appropriate to mention the observations made by the Tribunal while considering the Stay Application vide Order dated 7-2-2014. The same is reproduced as under : ".. Even though it is a sharing of expenses of the branch offices, the fact remains that the branch office belongs to one of the group companies and the owner of the branch among the group companies provides the ser....
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.... manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business. If any one of the tests is satisfied, then such a service falls within the definition of 'input service' and the manufacturer is eligible to avail Cenvat credit of the service tax paid on such services". 7. 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. 8. From the foregoing discussions, I am of the view that the denial of credit is unjustified. In the result, the impugned orders are set aside and the appeals are allowed with consequential reliefs, if any." 2.4 We have heard the rival submissions and perused the appeal records. Th....
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....eging that no services were rendered. It is submitted by the learned Counsel that ARBL and MPPL are separate legal entities incorporated under the Companies Act, 1956 and they are separately assessed to Income Tax. M/s. ARBL and M/s. MPPL being independent legal entities, such money collected from appellants for the services provided to them and also expenses recovered to compensate the cost of sourcing the services, would be taxable under BSS/BAS. There is no evidence to establish that there is no intention to provide service and it was mere understanding with the sister companies for sharing of common expenses. In CCE, Bangalore v. Stanzen Toyotetsu India (P) Ltd. - 2011 (23) S.T.R. 444 (Kar.) the Hon'ble High Court while considering the eligibility of credit on input service observed as under : "the services mentioned in the section are only illustrative and it is not exhaustive. Therefore, when a particular service not mentioned in the definition clause is utilised by assessee/manufacturer and service tax paid on such service is claimed as Cenvat credit, the question is what are the ingredients that are to be satisfied for availing such credit. If the credit is availed by the....
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.... relief. However, it disallows Cenvat Credit on the grounds that the appellant availed it based on photocopies of invoices addressed to their Bangalore unit and on a proportionate basis for services provided by foreign companies, M/s. AKTElBOLAGET SKF and M/s. Mphasis Limited. The Bangalore unit did not issue invoices under Rule 4A of the Service Tax Rules, 1994, or as per Rule 9(1) of the Cenvat Credit Rules, 2004, which prescribe specific documents for availing Cenvat Credit. Service Tax was paid under the Reverse Charge Mechanism and proportionately distributed between the Bangalore and Ahmedabad units. Supporting documents, including statements and bifurcated invoices, were provided to show that Service Tax tallied with the credit availed by the Ahmedabad unit. The assessee also produced challans evidencing Service Tax payment, with payments made by the Bangalore unit under the Ahmedabad Commissionerate's name. However, some challans were issued under the Bangalore Commissionerate. The Bangalore office was not registered as an Input Service Distributor (ISD) at the relevant time and did not distribute Cenvat Credit under Rule 4A. The invoices submitted were computer-generat....
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....rify these original invoices. However, without verifying the same, the Learned Commissioner has observed that original invoices are not available. Further, with respect to observations of the Learned Commissioner that possibility of credit being availed at Bangalore unit cannot be ruled out. A Certificate dated 30.06.2020 from Bangalore unit has been attached certifying that they have not availed credit of Rs. 47,85,079 pertaining to services received by Ahmedabad unit. That other allegation in Show Cause Notice is that the credit does not have any nexus with output services. However, the impugned order-in-original has confirmed demand on other grounds. Hence, order is beyond the scope of Show Cause Notice and thus legally not sustainable.. That, challans are a valid document for claiming credit of tax paid under reverse charge under rule 9(1)(e) of Cenvat Credit Rules 2004. The appellant relied upon the case law in the matter of ICICI Prudential Asset Management Co. Limited - 2020 (43) GSTL 209 (Tri-Mum); Cargill India Pvt. Limited - 2016 (45) S.T.R. 124 (Tri. - Bang.); M/s Kakinada Seaports Limited - 2015 (40) S.T.R. 509 (Tri. -Bang.). It was further contended that the challan is....
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....ss- Rs. 47,85,079/- The issue involved is that the impugned credit has been claimed on the basis of photocopy of invoices and invoices issued on HO address. The grounds are the same as at Sr. No. 2 above. It has already been held that the Cenvat credit cannot be disallowed on these grounds. Accordingly, the demand on this count is quashed. (d) Credit claimed without valid documents - Rs. 5,41,188/- 4. The appellant has claimed credit based on invoices which are in the name of other units of the Appellant. Accordingly, the appellant is not entitled to claim the same as the appellant has not produced any valid invoices in the name of its Ahmedabad unit and only challans have been produced. 4.1 In the impugned order, It has been held that in some cases pertaining to the Cenvat Credit on Business Support Service, the Cenvat credit is ineligible as the GAR 7 challan pertains to Bangalore unit. In another case, they have also taken the Credit of VAT paid. That the last date of audit was 05.10.2011 and even after a lapse of such a long period, the assessee failed to produce the invoices on which the credit availed. 4.2 The appellant has claimed to have submitted the documents on the ....
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....nput credit of services provided to a residential colony was denied as the same was considered to be a welfare activity in the case of Cement-2010 (20) S.T.R. 456 (Bom.), holding that to qualify as an input service, the activity must have nexus with the business of the assessee. The expression 'relating to business' in Rule 2(l) of CENVAT Credit Rules, 2004 refers to activities' which are integrally related to the business activity of the assessee and not welfare activities undertaken by the assessee. 5.1 During the course of personal hearing the appellant submitted that the judgements relied upon in the order-in-original are not applicable in the present case in as much as the same pertains to residential colony for employees whereas in the present case, the credit pertains to guest houses for stay of professionals who were involved in the setting up of factory. Further, the entire credit pertains to the period prior to 01.04.2011. The appellant relies upon the following judgements to submit that the credit is rightly eligible (i) ACC, Associated Capsules P Limited - 2019 (20) GSTL 346 (Bom.) (ii) Mafatlal Industries Limited - 2020 (43) G.S.T.L. 562 (Tri. - Ahmd.)....
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....ion passed following order :- "Relying on the said decision, the credit of guest houses located next to the factory premises is allowed and the credit in respect of guest houses located away from the factory premises is allowed. The matter is remanded to the original adjudicating authority to determine the guest house which are located next to the factory and those which are not located next to the factory and determine the liability. Accordingly, the appeal is allowed by way of remand to the original adjudicating authority." 5. Having heard the Learned Counsel for the parties and having perused the documents on record, we notice 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. T....
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.... is not entirely satisfactorily. 5.4 Even in relation to a guest house which may not have been situated close to the manufacturing unit of the Assessee, if it is pointed out that the use thereof was not for the personal use or consumption of the employees, exclusion clause in the definition of input service, may not apply. In the circumstances, while the Tribunal has already remanded the issue for fresh consideration, we do not interfere with the remand order. However, the tests laid down by the Tribunal in the impugned judgment, would not apply. In light of the observations made above, it would be open for the Assessee to attempt to persuade the Assessing Officer that the guest houses in question were not used for the personal use or consumption of the employees. 5.5 We further find that even the coordinate bench of this Tribunal has held the Cenvat credit on Guest House service eligible in the case law Mafatlal Industries Limited - 2020 (43) G.S.T.L. 562 (Tri. - Ahmd.) cited by the appellant. Accordingly, Cenvat credit on this ground is allowed and impugned order is set aside. (f) Credit on Event Management Service - Rs. 1,97,306/- 6. We find that the Cenvat credit on this gr....