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ST – Input service – Though not a mandatory requirement under CCR, CA certificate could act as an additional corroborative evidence in support of appellant’s claim : CESTAT

2019-TIOL-2519-CESTAT-MUM

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, MUMBAI

Service Tax Appeal No. 87021 of 2018

Arising out of Order-in-Appeal No. CD/TR (APPEALS)/MC/58/2017-18, Dated: 12.2.2018
Passed by the Commissioner of Central GST and Central Excise, Thane Rural

Date of Hearing: 27.03.2019
Date of Decision: 19.07.2019

JM FINANCIAL LTD
7TH FLOOR, CNERGY, APPASAHEB MARATHE MARG
PRABHADEVI, MUMBAI – 400025

Vs

COMMISSIONER OF CGST AND CENTRAL EXCISE
THANE RURAL, 4TH FLR., GST BHAWAN, PLOT NO.24-C, SECTOR-E
BANDRA KURLA COMPLEX, BANDRA (E ), MUMBAI-400051

Appellant Rep by: Shri Karan Sarawagi, CA
Respondent Rep by: Shri S B Mane, AC (AR)

CORAM: Suvendu Kumar Pati, Member (J)

ST – Denial of cenvatcredit on tax paid towards input services of tours & travels and hotel expenses to the appellant culminating into confirmation of duty demand of Rs.2.65 lakh along with interest under section 75 and penalty under sections 76 as well as 77 of Finance Act, 1994 is assailed in this appeal.

HELD: Position of law has undergone a sea change after pronouncement of Larger Bench decision by the of Supreme Court in the case of Ramala Sahakari Chini Mills Ltd. [ 2016-TIOL-20-SC-CX-LB ], which has enlarged the meaning of “includes” found mentioned in rule 2(a) of the Cenvat Credit Rules, 2004 [CCR, 2004] and used it as an “extension” to the definition and not “restriction” – admittedly, this finding and the other subsequent decisions, which had been in place before passing of order by the Commissioner (Appeals), were not taken into consideration while passing his order – on a random sampling concerning one Mr. Vikram Mago found attached to the Appeal memo, the counsel for the appellant was able to demonstrate the right linkage between tour program, its official requirement and invoice copy – this being the factual and legal position, it is proper to remand the matter to the original adjudicating authority to re-determine the admissibility/in-admissibility of cenvat credit on the basis of the documents already produced by the appellant before it since scrutinization of such voluminous documents at the second appeal late stage would amount to mini trial which is not supposed to be done in an appeal proceeding – requirement of CA certificate, though not a mandatory requirement under the provisions of CCR 2004, could act as an additional corroborative evidence in support of appellant’s claim for which no finding on the legality of the Commissioner’s order for production of CA certificate is required to be given at this stage – the appeal is allowed by way of remand to the original adjudicating authority: CESTAT [para 6, 7, 8, 9]

Matter remanded

Case laws cited:

Maruti Suzuki v. CCE, Delhi-III – 2009-TIOL-94-SC-CX… Para 3

CCE v. Sundraram Brake Linings – 2010-TIOL-863-CESTAT-MAD… Para 3

CCE v. Manikgarh Cement – 2010-TIOL-720-HC-MUM-ST… Para 3

Ramala Sahakari Chini Mills Ltd. v. CCE – 2016-TIOL-20-SC-CX-LB… Para 3

Shasun Pharmaceuticals Ltd. v. CESTAT 2018 (9) GSTL J129 (Mad.)… Para 3

CCE v. BEL, 2016 (42) STR 815… Para 3

FINAL ORDER NO. A/86269/2019

Per: Suvendu Kumar Pati:

Denial of Cenvat Credit on tax paid towards input services of tours & travels and hotel expenses to the appellant culminated into confirmation of duty demand of Rs. 2,65,472/- along with interest under section 75 and penalty under section 76 as well as 77 of Finance Act by the Commissioner of Central GST and Central Excise, Thane Rural is assailed in this appeal.

2. Brief facts of the case of the appellant is that it is engaged in the business of providing shares/stock broking, advisory & financial services to Indian and foreign clients for which its staff had to conduct frequent travel inland and abroad. Basing on Audit Report, 3 show cause notices dated 11-10-2013, 24-3-2015 & 10-2-2016 were issued for the period 2012 – 2015 demanding tax on allegedly wrong availment of Cenvat Credit. Appellant replied to the same denying all the allegations of wrong availment of credit, the matter was adjudicated upon, duty demand along with interest was confirmed in both Order-In-Original and Order-In-Appeal passed on the appeal prefer by the appellant. The said Order-In-appeal is assailed by the appellant before this Bench.

3. During the course of argument, it has been brought to the notice of this Bench that appeal filed by the appellant before the Commissioner (Appeals) was rejected by the Commissioner (appeals) placing reliance on overruled judgment of Maruti Suzuki v. CCE, Delhi-III reported in [2009 (240) E.L.T. 641 (S.C)] 2009-TIOL-94-SC-CX of the Hon’ble Supreme Court, CCE v. Sundraram Brake Linings [2010 (19) STR 172 =2010-TIOL-863-CESTAT-MAD and CCE v. Manikgarh Cement, 2010 (20) STR 456 (Bom.)] =2010-TIOL-720-HC-MUM-ST which ratio had infact undergone sea change in view of larger Bench of Hon’ble Supreme Court’s decisions given in “Ramala Sahakari Chini Mills Ltd. v. CCE, reported in – 2016-TIOL-20-SC-CX-LB and Shasun Pharmaceuticals Ltd. v. CESTAT of the Hon’ble Madras High Court reported in 2018 (9) GSTL J129 (Mad.) and CCE v. BEL, 2016 (42) STR 815.

4. It was further contended by the appellant that it had produced relevant documents as evidence to prove the nexus between input and output services but observation was made in both Order-In-Original & Order-In-Appeal that expenses were not related to the disputed services as no documentary evidence was provided to justify the same despite the fact that at Page 7 para 5b of the Order-In-Appeal, Learned Commissioner (appeals) had acknowledged that appellant had submitted all the documentary evidence such as Bills/Invoices/Debit Notes etc. for all the items that was running to 8 spiral binding files and explained on sample basis as to how each of the input services were used by the appellant in providing output services. Further, it has been pointed out by Learned Counsel for the appellant that detail of Cenvat Credit availed on account of foreign travelling expenses for employees, name and purpose, which were submitted by way of Annexure-II to the written submission dated 19th Sept. 2016 and other statements concerning tour, travel and hotel expenses were not accepted as evidence by the Commissioner (Appeals) for want of CA certificate, which has never been a requirement under the CCR rule.

5. Learned AR for the respondent department argued in support of the reasoning and rationality available in the order passed by the Commissioner (Appeals) and pointed out that appellant failed to establish the linkage between input and output services for which credit was denied to it.

6. On perusal of case record and sample invoices, it is observed that lower authorities had gone through an erroneous understanding of CCR rule 2004, which denied admissibility of such credit on such travel benefits extended to employees on vacation such as leave travel concession, which services were used primarily for personal use or consumption of any employee, to hold a finding that tax paid on all travel and hotel bills are inadmissible for the purpose of determination of Cenvat Credit. This is actually and legally not in conformity to the rule guiding admissibility of Cenvat Credit against input services. Position of law has under gone sea change after pronouncement of larger Bench decision by the of Hon’ble Supreme Court in Ramala Sahakari Chini Mills Ltd. case, cited Supra, which has enlarged the meaning of “includes” found mentioned in Rule 2a of the Cenvat Credit rule 2004 and used it as an “extension” to the definition and not “restriction”. Admittedly this finding and the other subsequent decisions, which had been in place before passing of order by the Commissioner (Appeals), were not taken into consideration while passing his order.

7. During course of argument, Learned Counsel for the appellant Mr. Karan Sarawagi, at the instance of the Bench, explained with reference to the Annexure annexed to its written submission dated 24-8-2016 about the detail of officials tours conducted by the employees. For example, Mr. Suhas Harinarayanan who visited Delhi for client meeting with ING Vysya Bank and produced also copies of travel requisition slip from the spiral binding of documents to justify that the said tour was conducted on 3-6-2013 and concluded on its next day purely for the purpose of said meeting. He also produced the Travel Agent bill with bifurcation of Service Tax component and to justify that the credit was taken on Service Tax paid in said Invoice. On a Random sampling concerning one Mr. Vikram Mago found attached to the Appeal memo, he could able to demonstrate the right linkage between tour program, its official requirement and invoice copy. This being the factual and legal position, I consider it proper to remand the matter to the original adjudicating authority to re-determine the admissibility/ in admissibility of Cenvat Credit on the basis of the documents already produced by the appellant before it since scrutinization of such voluminous documents at the second appeal late stage would amount to mini trial which is not supposed to be done in an appeal proceeding.

8. Requirement of CA certificate, though not a mandatory requirement under the provision of CCR 2004, could act as an additional corroborative evidence in support of appellant’s claim for which no finding on the legality of the Commissioner’s order for production of CA certificate is required to be given at this stage. Hence the order.

ORDER

9. The appeal is allowed by way of remand to the original adjudicating authority namely Asst. Commissioner, Division B, Service Tax Commissionerate-III, Mumbai for re-adjudication on the basis of above observation. The order passed by Commissioner (Appeals) in Appeal No. CD/TR (APPEALS)/MC/58/2017-18 dated 12-2-2018 is accordingly set aside. Appellant is duty bound to participate in the re-adjudication proceedings upon notice.

(Order pronounced in the court on 19.07.2019)

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