Custom, Excise & Service Tax Tribunal
S.H. Kelkar & Co. Ltd vs Cce Mumbai Iii on 19 September, 2017
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/85234/16
(Arising out Order-in- Appeal No. CD/848/M-III/2015 dated 05.11.2015 passed by the Commissioner of Central Excise (A), Mumbai II)
For approval and signature:
Honble Shri Raju, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Seen
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
S.H. Kelkar & Co. Ltd.
Appellant
Vs.
CCE Mumbai III
Respondent
Appearance:
Shri Yogesh Patki, Advocate for the appellant Shri A.B. Kulgod, AC (AR) for the respondent CORAM:
Honble Shri Raju, Member (Technical) Date of hearing : 08.09.2017 Date of decision : 19.09.2017 O R D E R No: ..
Per: Raju The appellants S.H. Kelkar & Co. Ltd. are in appeal against denial of cenvat credit on certain services.
2. Ld. Counsel for the appellants argued that as a result of audit a certain objection were raised in respect of service tax credit taken by the appellants. The said audit objection related to cenvat credit availed in respect of certain services obtained for handling a case on family settlement. Another objection raised in the said audit was in respect of certain services on the issue of merger with two other companies. Ld. Counsel argued that the objection regarding availment of credit for the purpose of services obtained for the purpose of family settlement had been admitted and they have reversed the credit. However a show-cause notice was issued demanding reversal of cenvat credit amounting to `4,53,818/- holding the same to be services utilised for purpose of family settlement. In adjudication process, cenvat credit of `1.64 lakhs was allowed and demand of `2,89,018/- was upheld as service tax paid towards services received for family settlement. The said order was upheld by the first appellate authority and consequently they are in appeal before the Tribunal.
3. Ld. Counsel pointed out that the proceedings wrongly held that the said services were used for the purpose of family settlement. He produced the invoice under which the said credit was taken. The said invoice described the services as follows:-
Being professional services rendered for advise in realigning group structure & assistance in implementing the same vide LOE dated November 23,2011 Thereafter he produced the said LOE dated 23.11.2011 wherein purpose of the said LOE was mentioned in para 1 which reads as follows:-
1. Background S.H. Kelkar & Co. Private Ltd. was incorporated on 1st day of July 1955 under the provisions of Indian companies Act, VII of 1913 under the name and style of S.H. Kelkar & Co. Limited. Further, with effect from 18th May 2001, the name of the Company was changed to S.H. Kelkar & Co. Private Limited under the provisions of Companies Act, 1956. SHK is engaged in the business of Flavours and Fragrances and has its registered office at Devkaran Mansion, 36, Mangaldas Road, Mumbai, Maharashtra.
The Management of the Company now contemplates to acquire the business of Tridhaatu Estates Private Limited and Amerigo Holdings & Investment Private limited to expand its commercial objective by way of merger.
In view of this background, the Company has approached KPMG to advise on alternative structures in this respect from tax and regulatory perspective and also assist them from a tax and regulatory perspective in the implementation of the Companies selected.
4. He pointed out that the said services was obtained not in respect of family settlement but for restructuring in the shape of merger.
5. On a specific query of the bench as to under what head of the definition of input services would this services be covered, he pointed out that the services have been obtained in April 2007 would be covered under legal, accounting, financing services.
6. Ld. AR relies on the impugned order.
7. I have gone through the rival submissions. I find that the said services have been used for the purpose of merger with other companies. The definition of input services after April 2011 reads as follows:-
input service as any service:-
(i) used by a provider of output service for providing an output service; or
(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of the provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes services,
8. It is seen that the services of merger has no relation with the manufacture. It is seen that the para 4 of the show-cause notice clearly alleges that the said services does not qualify as input services under Rule 2(i) of the Cenvat Credit Rules. The said service relates to corporate restructuring and is not specifically covered under any of the heads of input services. The ld. Counsel had suggested accounting, financing or legal services. I do not find any merit in the said assertion. The said was neither accounting nor financing or legal in any manner. Thus the said services do not qualify to an input service.
9. In these circumstances, I do not find any merit in the appeal, the same is dismissed.
(Pronounced in Court on ..............................) (Raju) Member (Technical) //SR
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