CENVAT Credit Eligible On Service Tax Paid By Registered Premises Even If Invoices Raised In The Name Of Unregistered Branch Office: CESTAT

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the assessee is eligible for CENVAT Credit on service tax paid by registered premises even if invoices raised are in the name of an unregistered branch office.

The single bench of Suvendu Kumar Pati (Judicial Member) has observed that in the event of centralised billing and centralised accounting systems, when one registration is permissible under Section 4(2), discharging Service Tax liability from the registered premises would not disentitle the benefits of CENVAT Credit on the Service Tax paid by the service provider if invoices are raised in the name of branch offices, even if the said branch offices are unregistered, since Service Tax liability has been discharged by the main office also for services provided by the branches.

The service tax was held to be payable by law firms between 01.09.2009 and 30.06.2012. Accordingly, service tax was discharged by the appellee/assessee from its Mumbai head office for both its Mumbai and Delhi branches without a centralised registration. The appellant received CENVAT Credit for input services received at both the Mumbai and Delhi branch offices. A show-cause notice was issued by the respondent/Department for reversal of CENVAT Credit which they availed in respect of an unregistered Delhi office for providing service from Delhi. The matter was adjudicated upon and service tax, along with interest and penalties, were all confirmed against the Appellant.

The appellant has assailed the denial of CENVAT Credit to the Appellant Law Firm and its confirmation by the Commissioner (Appeals).

The appellant contended that a show-cause notice was issued for reversal of credit under Rule 14 of the CENVAT Credit Rules for contravention of Rule 4 of the CENVAT Credit Rules, 2004, without specific mention of which sub-rule of Rule 4 was violated. The Service Tax has been paid on the input services availed by the appellant and those input services were received and used for providing taxable services against which the appropriate Service Tax was also discharged on the output services. For the purpose of non-inclusion of premises at Delhi in the registration certificate at Mumbai, credit cannot be denied to the appellant since the show-cause notice itself indicates that it was a technical mistake.

The department contended that the denial of CENVAT Credits to the Appellant was done by the Commissioner (Appeals) after a meticulous examination of the provision of law. Section 69(1) of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994 clearly stipulates that every person liable for paying service tax is required to get service tax registration within 30 days of the commencement of the business.

The CESTAT set aside the order passed by the Commissioner (Appeals) to the extent of the denial of CENVAT credits to the Appellant for input services availed by the branch office in Delhi.

Case Title: Desai and Diwanji Versus Commissioner of CGST

Citation: Service Tax Appeal No. 87464 of 2019

Date: 07.10.2022

Counsel For Appellant: Advocate N.P. Khutal

Counsel For Respondent: Authorised Representative Prabhakar Sharma

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