ST - Appellant is engaged in business of financing for which windmill has no use - Repair and maintenance service is not an Input service: CESTAT
By TIOL News Service
MUMBAI, JULY 25, 2017: IN this appeal filed against the O-in-A, the following issues are involved -
(1) The department has taken service tax rate as 8% according to the date of receipt of service charges whereas the claim of the appellant is 5% service tax as on the date of agreement in respect of the service.
2) Denial of CENVAT credit on debit notes issued by the service provider.
3) CENVAT Credit on the services of repair and maintenance of windmills.
4) CENVAT Credit in respect of service of Chartered Accountant for the service of sale of equity share of Tata Home Finance to some other party.
5) Denial of CENVAT Credit in respect of invoices which do not bear the registration number of service provider.
6) As regards the CENVAT Credit of Rs.5,596/- on the invoices not submitted and Rs.2695/- on CA certificate charged to branch office, appellant does not contest.
The appellant submitted -
+ As regard the higher rate of service tax of 8% applied by the department, the service was provided prior to 14.5.2003 whereas the payment for such service was received on or after 14.5.2003; that the time of payment is not relevant as service tax is applicable as on date of provision of service which in the present case is prior to 14.5.2003, when the rate of service tax was 5%, therefore, the demand is not sustainable.
+ Debit note has been held as valid document by various judgments, therefore, the credit cannot be denied.
+ Windmills are also part of the overall business of the appellant, therefore, any service used in or in relation to overall business activity is eligible for CENVAT credit. Same is the case with the services received of CA relating to sale of equity shares.
+ Except the minor lapse that the invoice does not bear the registration number of the service provider there is no dispute that the service provider has raised the invoice and entire amount including service tax was paid to the service provider, therefore, credit cannot be denied.
Decisions viz. 2007-TIOL-1493-CESTAT-BANG, 2013-TIOL-1532-CESTAT-MUM, 2010-TIOL-1723-CESTAT-MAD, 2009-TIOL-2215-CESTAT-AHM , 2006-TIOL-1531-CESTAT-MUM, 2007-TIOL-2363-CESTAT-MUM, 2011-TIOL-1045-CESTAT-MUM, 2010-TIOL-745-HC-MUM-ST & 2011-TIOL-941-HC-KAR-ST were relied upon in support.
The AR justified the findings of the impugned order.
The Bench observed thus -
i) As regard the demand for difference of the rate of service tax we are of the view that the rate of service tax is applicable as on date of provision of service and not as on date of receipt of the service charges. Therefore, the view taken by the Revenue is absolutely incorrect and illegal without any support of law .
ii) Even though the Rule prescribed challan and invoice as valid document for availing the cenvat credit but if all the information required to be mentioned in the invoice is otherwise appearing on the debit notes, the said debit notes must be allowed for taking the credit.
iii) Regarding the Cenvat Credit on repair and maintenance service of windmills installed outside the premises of the appellant, we find that first of all the appellant is engaged in the business of financing for which windmill has no use. The electricity generated from the said windmill was partly sold to the Gujarat Electricity Board and partly diverted to their Group Company M/s Tata Motors. Therefore, the windmills is not used either for providing any service or carrying out any manufacturing activity. Therefore the basic requirement of the cenvat credit is not fulfilled, hence the credit on the repair and maintenance service of the windmills is clearly not admissible.
iv) As CA service relate to sale of equity stock in Tata Home Finance to some other party, this service is not related to the output service of the appellant as this service was availed against the investment made by the appellant out of the income generated from the overall business . Therefore, it is not related to any output service provided by the appellant, therefore, the credit is not admissible.
v) Merely because the registration number of the service provider is not mentioned on the invoices,CENVAT credit cannot be denied.
vi) Appellant is not contesting the denial of credit to Rs.5,596/- and Rs.2,695/-, so same is upheld.
Concluding that the penalty imposed would be commensurate to the demand as upheld by the CESTAT, the appeal was partly allowed.
(See 2017-TIOL-2572-CESTAT-MUM)
