Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax Kol vs M/S. Allahbad Bank, on 13 March, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.1
Service Tax Appeal No.282 of 2011
(Arising out of Order-in-Original No.05/COMMR./CE/KOL-III/2011-12 dated
07.04.2011 passed by Commissioner, Central Excise, Kolkata-III Commissionerate.)
Commissioner of Service Tax, Kolkata
(Kendriya Utpad Shulk Bhawan [3rd Floor], 180, Shantipally, Rajdanga Main Road,
Kolkata-700107.)
...Appellant
VERSUS
Allahabad Bank
.....Respondent
(2, Netaji Subhash Road, Kolkata-700001.) APPEARANCE Shri J.Chattpadhyay, Authorized Representative for the Appellant (s) NONE for the Respondent (s) CORAM: HON'BLE SHRI ASHOK JINDAL, MEMBER(JUDICIAL) HON'BLE SHRI RAJEEV TANDON, MEMBER(TECHNICAL) FINAL ORDER NO. 75099/2023 DATE OF HEARING : 13 March 2023 DATE OF DECISION : 13 March 2023 ASHOK JINDAL :
Revenue is in Appeal against the impugned order alleging that the Respondent was not entitled to take CENVAT Credit of the input services in contravention of Rule 4A(2) of Service Tax Rules, 1994 read with Rue 9 (1) of the CENVAT Credit Rules, 2004.
2. The facts of the case are that the Respondent is a banking company and providing services under the category of 'Banking and Financial Services'. It was alleged that during the period April 2005 to March 2008, the Respondents have irregularly availed CENVAT Credit by willful contravention of Rule 4A(2) of Service Tax Rules, 1994, Rule 2 Service Tax Appeal No.282 of 2011 9(1) of CENVAT Credit Rules, 2004 as well as Rule 3 of Service Tax (Registration of Special Category of Persons) Rules, 2005. The Respondent was having Central Excise Registration of various offices of the Respondent. After going through the reply to the Show Cause Notice the Ld.Adjudicating authoirty dropped the Show Cause Notice against the Respondent. Aggrieved from the said order, Revenue is before us.
3. Heard the Ld.Authorized Representative for the Revenue and considered the submissions.
4. In the impugned order, the Ld.Adjudicating authority has considered the reply filed by the Respondent and observed as under:-
"I observe that the instant DSCN was the effect on an audit objection raised by CERA-audit, while conducting audit of the accounts of M/s. Allahabd Bank, 2, N.S. Road, Kolkata-700001, as S.Tax Registrant holding Service Tax Registration Certificate bearing No.AACCA8464FST017 for providing "Banking and other Financial Services", to the effect that the assessee had taken CENVAT credit on the basis of internal statements called D-2 furnished by their different Zonal offices on above basis based on estimation. The Zonal offices were neither registered as input service distributors nor did the assessee receive the original invoice/bill from the Zonal offices. Such utilization of CENVAT credit transferred by Zonal offices to the assessee without conforming to statutory provisions has resulted in irregular availment and utilization of CENVAT credit to the tune of Rs.7,75,01,418/- covering the Fys. 2005-06, 2006-07 and 2007-08 respectively.
In this context, in the commercial field, it is seen that a manufacture or service provider may have head-office/regional office at different places. The service may be received at head office/regional office, but ultimately these will be indirectly used for manufacture or providing output service. Provision has been made to avail CENVAT credit of services received and paid for at head office, regional office. Such head office/regional office can be registered with Central Excise as 'Input Service Distributor.3
Service Tax Appeal No.282 of 2011 Now as per Rule 2(m) of CENVAT Credit Rules, 2004 "Input Service Distributor' mean . (a) an office managing the business of manufacture & producer of final products or provider of output service, (b) While receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and (c) issues involves bill or, as the case may be challan for the purposes of distributing the credit of Service-Tax paid on the said services to such manufacturer or producer or provider, as the case may be.
An office of assessee (manufacturer or service provider) is "input Service Distributor" if it satisfies all the above three ingredients. It is not that each and every office assessee is "Input Service Distributor"
and must register. The office must be registered as 'Input Service Distributor" if it wants to distribute credit. There is no law that 'distribution' is the only way of availing CENVAT credit of services received at office of assessee. There are various documents eligible for availing CENVAT credit. Invoice/Challan issued by 'Input Service Distributor' is one of the specified documents. Sometimes an assessee has offices at various places but accounting is done centrally in the factory. Sometimes, there are various factories of an assessee but accounting is done in main factory. In such cases, in my opinion, the main factory can directly take CENVAT Credit of Service-tax on the basis of documents. Law does not specify that there must be distribution of CENVAT Credit or that the distribution should be in a specified ratio. If no 'distribution' is necessary there should not be any need of 'Input service Distribution'.
The assessee has contended in their reply dated 17.05.2010 at para 2.1.6 that the Bank assesses the service-tax liability by collecting the details of the output services performed by the branches of the Bank. It also collects details of the input Services. The Zonal offices of the Bank collect these details form the branches functioning under their respective jurisdiction. All the details are then consolidated for the Bank as a whole and tax is paid after utilizing the CENVAT Credit. I also observe, that vide letter C.No.V(5)Misc/R/2/G-1/D- 1/ST/Audit/2009/2074 dated 31.07.2009 issued to the Dy.Director (RA- 1DT) Centre, Kolkata, Central Excise Revenue Audit, by the Superintendent, Range-III, Service-Tax Division-I, Kolkata, the latter 4 Service Tax Appeal No.282 of 2011 inter alia stated that the assessee have obtained centralized registration of H.O for payent of Service Tax as per the provision of Rule 4(2) of the Service Tax Rules, 1994 even though the services are provided by the various branches of the bank. In the said letter he stated that he held discussions with the officials of the concerned bank, and it came to light, that various input services are procured and utilized by various branch offices, of the bank. The input credit is availed and utilized by the Bank based on proper invoices. The various branches prepare a monthly statement incorporating details on invoices with dates and send it to the concerned Regional Office who in turn prepare a consolidated return and send it to the Head Office. This is an internal procedure followed by the Bank for getting information only regarding CENVAT Credit. The Branch and regional Offices of the Bank cannot be considered as Input Service Distributor as they receive as well as consume the services. Hence the question of Registration as Input Service Distributor does not arise. Also, since credit is availed by the branches of Regional offices based on Invoices provided by Service provider there seem to be no irregular availment of CENVAT Credit. Taking into consideration, the contention of the assessee and the observation of the Superintendent, Service-Tax, Kolkata, under whose jurisdiction the assessee falls, two things are Correctly established:-
I. The contention in the DSCN that the assessee had taken CENVAT on the basis of internal statements called D-2 furnished by their different Zonal offices on above basis based on estimation, loses both credibility and significance and therefore untenable.
II. There is no need to distribute input-service credit and therefore there cannot be any requirement to take registration as "Input Service Distributor".
Further the Bank is nationalized bank and a Government of India undertaking and therefore there cannot be any malafide intention to evade duty.
Moreover, they are registered with the Service Tax department and are paying service-tax on the various services provided by them. They have always paid the taxes as and when applicable on time and all the returns have been filed on time. All their activities are known to the 5 Service Tax Appeal No.282 of 2011 department and also the DSCN has no where mentioned tha the assessee has ever defualted in the past or are regular defaulter in respect of payment of Service Tax on the services provided by them. Also the Superintendent, Service-Tax, having jurisdiction over the assessee, have categorically stated in his said letter (Supra) that since credit is availed by the branches and Regional Offices based on invoices provided by Service providers, there seem to be no irregular availment of CENVAT credit. Further as contended by the assessee, there were audit conducted in the past and the audit teams have scrutinized the records of the Bank and therefore the department was well aware of the Bank's activities.
I also observe that the impugned DSCN (Supra) has proposed to impose penalty under Section 78 of the Finance Act, 1994. Section 78 is only attracted when any service-tax has not be levied or paid or has been short-levied or short-paid or erroneously refunded, by reasons of-
(a) Fraud, or
(b) Collusion, or
(c) Wilful mis statement, or
(d) Suppression of facts, or
(e) Contravention of any of the provisions of this chapter or of the rules made there under with intent.
From the charges as levelled against the assesse in the DSCN, I find that it is not a case of non-levy or not paid, short-levied or short-paid and/or erroneous refund of service-tax, it is a case of wrong availment of credit of tax paid by the assessee on input-services received by the assessee. I have already discussed above, that the activities of the assessee are not hit by any of the clauses mentioned at (a) to (e) supra and therefore, imposition of penlaty under section 78 of the Finance Act, 1994 is not warranted.
On the other hand from the facts and circumstances of the case under consideration, there are cogent reasons in favour of the assessee calling for invocation of the provisions of Section 80 of the Finance Act, 1994.
FINDINGS As the DSCN is devoid of any merits, I do not think it would be prudent to proceed further in the matter and therefore drop the same and 6 Service Tax Appeal No.282 of 2011 exonerate the assessee M/S Allahabad Bank, 2 Netaji Subhas Road, Kolkata-700001 of all the charges as framed against them in the impugned DSCN."
5. We have gone through the observations made by the Ld.Adjudicating authority had categorically found that the Respondents have obtained Central Excise Registration and is a Input Service Distributor. In that circumstances, we do not find any infirmity in the impugned order. Therefore the same is upheld. In the result the Appeal filed by the Revenue is dismissed.
(Operative part of the order was pronounced in the open Court.) Sd/ (ASHOK JINDAL) MEMBER (JUDICIAL) Sd/ (RAJEEV TANDON) MEMBER (TECHNICAL) sm