Custom, Excise & Service Tax Tribunal
Rajinder Kumar &Amp Associates vs Commissioner, Service Tax-Delhi Ii on 24 September, 2020
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS EXCISE & SERVICE TAX APPLELLATE
TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO. 1
Service Tax Appeal No. 52192 of 2016
[Arising out of Order-in-Original No. DLI-SVTAX-002-COM-018-15-16 dated
29.02.2016 passed by the Commissioner of Service Tax, Delhi-II]
M/s Rajender Kumar & Associatess Appellant
B-5/116, Sardarjung Enclave, New Delhi-110029
Versus
Commissioner of Service Tax, Delhi-II Respondent
Office of the Commissioner of Service Tax, Delhi-II, 5th Floor, 14-15, Farm Bhawan , Nehru Place, New Delhi-110019 Appearance Shri B L Narasimhan, Advocate for the Appellant Shri K Poddar, Authorised Representative for the Department Coram:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. C L MAHAR, MEMBER (TECHNICAL) Date of Hearing/Decision: September 24, 2020 FINAL ORDER NO. 51574/2020 JUSTICE DILIP GUPTA
1. The Order dated February 29, 2016 passed by the Commissioner of Service Tax, New Delhi1 confirming the demand
1. the Commissioner 2 of CENVAT credit with interest and penalty as also the demand of service tax to the extent of Rs. 22,510 out of the total demand of Rs. 2,80,975/- with interest and penalty has been assailed in this appeal filed by M/s Rajender Kumar Associates2. The Commissioner has dropped the demand of CENVAT credit amounting to Rs. 56,09,116/-
2. The Appellant is engaged in providing "consulting engineering services". An audit was conducted of the records of the Appellant and this resulted in the issuance of the show cause notice dated February 14, 2011. The show cause notice raised the following issues :
(i) There was irregular availment of CENVAT credit on invoices which were not addressed to the registered premises. This was alleged to be in violation of rule 4A of the Service Tax Rules, 19943 read with rule 9 of the CENVAT Credit Rules, 20044;
(ii) The Appellant did not have a central registration or an ISD registration to distribute the CENVAT credit;
(iii) There was a failure to discharge service tax liability on the photocopy and landscaping design services received from abroad in terms of rule 2(1)(d)(iv) of the 1994 Rules read with sections 66 and 66A of the Finance Act, 19945.
2. the Appellant.
3. the 1994 Rules
4. the 2004 Rules.
5. the Finance Act.
3
(iv) There was interest liability on late payment of service tax; and
(v) There was non-payment of 8% service tax in terms of rule 6 of the 2004 Rules for the Financial Year 2008-09 for provisions of exempted services to Special Economic Zone.
3. It will appropriate to refer to the issue involved, the amount proposed in the show cause notice, the amount confirmed under the impugned order and whether the Appellant is challenging that issue in a Tabular form. It is as follows:
Sl Issue Amount Amount confirmed Whether it is No. proposed in in impugned order challenged in Show Cause the present Notice appeal
1. Invoices not Rs.1,30,90,500 Rs. 1,30,90,500 Yes raised on confirmed as credit the was held to not be registered availed in respect of premises invoices issued on which was unregistered B5/115, but premises, which is instead also not registered as issued on an ISD.
the office
having (Rs.26,80,236 of
address as credit availed in
B-6/17 respect of invoices
issued on the
registered office also
confirmed for want of
proper documents.-
2. Import of Rs. 2,80,975/- Rs. 29,548 (22,510 The appellant is
services, plus 7038) was paid challenging Rs.
photography by the Appellant with 7038 paid as
service and interest of Rs. 16,090 service tax as it
interior in respect of relates to
decorator landscape design import of
service services imported services in the
from M/s. PL Design year 2005-06,
Co. Limited during the which is prior to
period 2005-06. This section 66A
amount has been being notified.
appropriated.
No service was was
held to be payable in
4
respect of services
received from M/s.
Wilkahahn Asia Pacific
as these related to
'furniture design
consultancy', which
became taxable only
after 01.06.2007
Demand in respect of
services received from
M/s. Kumtron
Nateethanasam was
also dropped as the
services did not
qualify as photography
service but conversion
of 2D perspective to
3D perspective. These
services were also
received before
18.04.2006.
3. Late fee on Rs. 2,99,509 Paid No.
service tax
4. Reversal of Rs. 56,09,116 Dropped as no No.
credit on reversal is required to
services be reversed for
rendered to services rendered to
SEZ an SEZ.
4. Shri B L Narasimhan learned counsel for the Appellant has made the following submissions:
(i) Registration is not a mandatory requirement for availment of CENVAT credit. In support of this submission reliance has been placed on the following observations:
a) Pernod Ricard India Private Limited vs. CST, Delhi6
b) Mportal India Wireless Solutions P Ltd. vs. CST, Bangalore7
c) Adbur Pvt Ltd. vs. CST, Delhi8
d) Manipal Advertising Services Pvt Ltd. vs. CCE, Manglore9 6 . 2019 (4) TMI 1808-CESTAT Chandigarh 7 . 2012 (27) STR 134 (Kar.) 8 . 2017 (5) GSTL 334 (Tri.-Del.) 5
(ii) No service tax was payable in respect of services imported prior to April 18, 2006. Reliance has been placed on the judgment of the Bombay High Court in Indian National Shipowners Association vs. Union of India10 against which the Appeal filed by the Department before the Supreme Court was dismissed. The decision of the Supreme Court is reported as Union of India vs. Indian National Shippers Association11;
(iii) Charge of suppression is unsustainable and, therefore, the extended period of limitation is not invokable; and
(iv) No penalty is liable to be imposed upon the appellant.
5. Shri Kanhaiya Poddar learned Authorized Representative of the Department supported the impugned order and made the following submissions:
(i) The Commissioner was justified in concluding that the Appellant had made an irregular availment of CENVAT credit to the extent of Rs. 1,04,10,273/- as invoices were issued on unregistered premises; and
(ii) CENVAT credit of Rs. 26,80,236/- was wrongly availed and utilized on the basis of invoices addressed to the registered office as the certificates issued by the Chartered Accountant were not supported by documents as prescribed 9 . 2010 (19) STR 506 (Tri.-Bang)
10. 2009 (13) STR 235 (Bom)
11. 2010(17) STR J57 (SC).6
(iii) under rule 9 of the 2004 Rules read with rule 4 of the 1994 Rules.
6. The submissions advanced by the learned Counsel for the Appellant and the learned Authorised Representative of the Department have been considered.
7. The issues that arise for consideration in this appeal are;
(i) Whether the invoices on which CENVAT credit was availed were proper invoices in terms of rule 4A of the 1994 Rules read with rule 9 of the 2004 Rules.
(ii) Whether the Appellant is entitled to avail CENVAT credit on the strength of invoices/ bills issued to their office which is unregistered; and
(iii) Whether the Appellant was required to obtain Central Excise Registration or ISD Registration for availing CENVAT credit on the invoices issued on a different address.
8. The Commissioner has held that the Appellant was not eligible to avail the CENVAT credit on the basis of invoices for two reasons. The first is that most of the invoices raised on the registered premises on the strength of which the Appellant had availed the CENVAT credit were not addressed to the Appellant or the said invoices were not in accordance with the conditions as laid down in 1994 Rules and the 2004 Rules. The second is that the Appellant did not have a centralized service tax registration 7 for different offices nor it was registered as input service distributor. Thus, as the Appellant was not eligible to avail the CENVAT credit in respect of invoices not addressed to the registered premises as per rule 4A (1) of the 1994 Rules read with rule 9(2) of the 2004 Rules, CENVAT credit amounting to Rs. 1,30,90,500/- [Rs. 26,80,236 plus Rs 1,04,10,273] was not admissible.
9. To appreciate this issue, it would be appropriate to reproduce rule 4A of the 1994 Rules and relevant portion is as follows:
"4A. Taxable service to be provided or credit to be distributed on invoice, bill or challan - (1) Every person providing taxable service, not later than fourteen days from the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, shall issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect such taxable service provided or agreed to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely :-
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
(iii) description and value of taxable service provided or agreed to be provided; and
(iv) the service tax payable thereon:
Provided xxxx xxxx xxxxx"
10. The relevant portion of the rule 9 of the 2004 Rules is as follow:
" Documents and accounts.8
(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely:-
(a) an invoice issued by-
(i) a manufacturer for clearance of-
(I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;
(II) inputs or capital goods as such;
(ii) xxxx xxxx xxxx
(iii) xxxx xxxx xxxx
(iv) xxxx xxxx xxxx (2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said documents:
Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or service covered by the said document have been received and accounted for in the books of account of the receiver, he may allow the CENVAT credit."
11. In regard to the office situated at B5/116 Safdarjung Enclave, New Delhi, which is registered with the Service Tax Department, the Commissioner observed as follow:
"From the certificate (issued by the M/s Bhasin & Co., Chartered Accountant) and supporting documents submitted by the Noticee, I find that CENVAT credit availed by the Noticee on the basis of invoice/letter/debit note lack vital details and are not proper documents required for availing the CENVAT credit. The noticee in support of above certificate was not able to submit even a single proper invoice. Other documents prescribed under Rule 9 of the CENVAT credit Rules read with 4A of the Service Tax Rules, 1994. Hence contention of the Noticee is not tenable, I thus hold that Cenvat Credit of Rs. 26,80,236/- availed on the basis of invoices addressed to registered office of the Noticee is inadmissible on the ground stated above and wrongly 9 availed & utilized by the noticee during the period 2005-06 to 2009-10."
"Plain reading of rule 2(m) read with Rule 7 of CCR reveals that ISD registration is required where credit is to be distributed to more than one units. In the present case, the Noticee has a registered office, B5/116, and carrying out activity of consulting engineer and architect from another premises, B6/17. It is not in dispute that the branch offices were not registered as ISD. Further it is observed that in order to distribute CENVAT credit as an ISD, one has to obtain service tax registration as an ISD. The invoices are to be raised only in the name of such registered Noticee. Credit on the same can be taken and distributed. On invoices raised in the name of someone else, CENVAT credit cannot be taken. As in the facts and circumstances, there is no dispute that invoices were raised in the name of the Noticee but on the branch office which was not registered as ISD. Hence, I hold that CENVAT credit cannot be taken by the head office or corporate office."
12. The Appellant has in the memo of appeal placed on record the certificates issued by the architects and interior designers. These certificates give the amount, the name, PAN no. and service tax no. These details are, therefore, in accordance with the 1944 Rules and the 2004 Rules and thus denial of CENVAT credit of Rs. 26,80,236/- on the invoice addressed to the registered premises bearing no. B5/116 is incorrect.
13. In regard to CENVAT credit of Rs. 1,04,10,273/- availed by the Appellant on the basis of invoices addressed to the office situated at B6/117 Safdarjung Enclave which is not registered with the Service Tax Department, the Commissioner discussed the issue in two parts, namely:
"(i) Whether the Noticee is entitled to avail the CENVAT credit on the strength of invoices/bills issued to their office which is unregistered with Service Tax Department.10
(ii) Whether the Noticee is required to obtain centralized service tax registration for their different offices or they are required to registered as input service distributor for availing the CENVAT credit on the invoices issued on the different address of the Noticee."
14. The Commissioner held that invoices should contain the address registered with the Service Tax Department and the findings are:
"Here it is pertinent to mention that Rule 4A of Service Tax Rules, 1994 speaks about invoices, bills and challans to be issued by the service provider. It states that invoices, bills and challans shall be serially numbered and shall contain the following, namely-(i) the name, address and the registration number of such person; (ii) the name and address of the person receiving taxable service; (iii) description and value of taxable service provided or agreed to be provided; and
(iv) the service tax payable thereon. Further, sub-rule (2) of Rule 9 of CENVAT credit Rules, 2004 states that no CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document. The proviso to this Rule states that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit. Though I agree with the contention of the Noticee that the cenvat credit rules do not state that the premises of the recipient has to be registered preemies in order to avail the cenvat credit, yet in view of the rules quoted herein above i.e. either rule 4 or rule 9 of CCR, the name and address of the person receiving the service is of utmost importance. In the given case the name and address of the service recipient pertains to the branch which is not registered with the jurisdictional authorities.
Now, when the cenvat credit rule gives a discretion to the deputy/ assistant commissioner to allow the credit on being satisfied that the goods of services covered by the documents have been received and accounted for in the 11 books of account of the receiver, how can he/she can be supposed to have been convinced about the receipt of certain services which are received in the location which does not registered under in his/her jurisdiction. Hence the contention of the Noticee does not have any merit and is totally unacceptable."
15. The registration of premise with the Service Tax Department is not a condition for availing CENVAT credit.
16. The Karnataka High Court in MPortal India Wireless Solutions (P) Limited held that there is no requirement in law that the premises should be registered for availing CENVAT credit and the relevant portion is reproduced below:
"7. Insofar as requirement of registration with the department as a condition precedent for claiming CENVAT credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribed that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside".
17. A Division Bench of the Tribunal in Adbur Private Limited also observed as follows:
"9. Regarding denial of Cenvat credit on the ground that the invoices were addressed to unregistered premises of the appellant, we note that there is no dispute regarding eligibility of input service for availability of credit to the appellant. The denial of credit is only with reference to address in the document. We find in various decisions, this Tribunal held that the credit cannot be denied on this reason. Reference can be made to the decision in Manipal Advertising Services Pvt. Ltd.(supra). We also note that in the appellant's own case on the same issue, the Original 12 Authority for the later period held that denial of credit cannot be justified on this ground, vide order dated 21-7-2016."
18. This is what was also held by a Division Bench of the Tribunal in Pernod Ricard India Private Limited.
19. Once the requirement of rule 4A of the 1994 Rules and rule 9 of the 2004 Rules are satisfied, the benefit of CENVAT credit could not have been demanded. Thus, the Commissioner was not justified in denying the benefit of CENVAT credit on the unregistered premises.
20. The Commissioner has further held that the benefit of CENVAT credit for services received by the Appellant on the strength of invoices addressed to another unit is not admissible as the Appellant failed to take Central Registration or ISD Registration to avail and distribute the CENVAT credit.
21. This finding of the Commissioner is also not correct. There is no law that prescribes that the only way to distribute CENVAT credit is registering as an ISD.
22. It has also contended by learned Counsel for the Appellant that no service tax was payable in respect of services imported prior to April 18, 2006. In this connection it has been pointed out that demand on Rs. 7038 was confirmed in respect of services imported from M/s P L Design Company Limited during the period 2005-06. The amount of service tax has been paid by the Appellant and it has also been appropriated in the impugned order. It is, therefore, not necessary to decide this issue. 13
23. Thus, except for the demand of Rs. 7038/- that has been appropriated, the remaining demands confirmed by the Commissioner in the impugned order are set aside. The appeal is allowed to the extent indicated above.
(JUSTICE DILIP GUPTA) PRESIDENT (C L MAHAR) MEMBER (TECHNICAL) Tejo