CESTAT | Whether place of providing service play any role in entitlement of Cenvat Credit? Tribunal answers

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) allowed an appeal which was filed against the denial order of the Commissioner (Appeals) where the issue was to decide whether the appellant was entitled to Cenvat credit in respect of Dredging Services and Marine Consultancy Services provided by the service provider for smooth navigation of the vessels at the private jetty which is used by the appellant.

The counsel for the appellant, Mr Jigar Shah submitted that the service was provided by the service provider to the appellant and not to anyone else and the expenses for the service were borne by the appellant and services were availed for their own business purpose in order to smooth navigation of vessels, which was provided by jetty. Therefore, there was no dispute that service recipient was the appellant and they had paid the service charge. Therefore, the service clearly falls under the ambit of Input Service, as defined under Cenvat Credit Rules, 2004.

The Tribunal observed that there is absolutely no dispute that the appellant themselves were the service recipient. They borne the service charges along with service tax paid by the service provider. The Tribunal relied on the judgment of Sanghi Industries Ltd. v. CCE, 2019 (12) TMI 528 CESTAT Ahmedabad where it was held,

            “6.6 In respect of dredging services we find that the same was in respect of jetty in the factory premises and is used for transportation as well as import and export of goods. Since the services are related with the business of the company, the Appellant are eligible to avail credit of the same. As regard denial of credit on excess tax charged by the service provider, we find that the assessment at the end of the service provider has not been challenged. The Appellant has paid the amount of service tax charged to thorn. In such case, the credit cannot be denied to them. We thus are of the view that the Appellant are eligible for availing cenvat credit on impugned services, Resultantly we allow all the appeals filed by M/s Sanghi Industries Limited in the above terms with consequential reliefs, if any.”

The Tribunal while allowing the appeal set aside the impugned order and explained that location, where the service was provided, is immaterial what’s important was to see that irrespective of such services have been provided anywhere but it is for the purpose of the assessee and it is received by the assessee. If that test is qualified then it cannot be said that the service was not received by the assessee.[Ultratech Cement Ltd. v. Commr. of CE & ST, 2021 SCC OnLine CESTAT 116, decided on 15-03-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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