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CESTAT Allows Cenvat Credit To The Member Of Industries Association Who Received Services And Borne Expenditure

Mariya Paliwala
25 May 2022 8:30 AM GMT
CESTAT Allows Cenvat Credit To The Member Of Industries Association Who Received Services And Borne Expenditure
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The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has held that the member of an industry association who has received the services and borne the expenditure is entitled to the cenvat credit.

The appellant/assessee is a member of the Valia Industries Association. Service provider Shree Rang Services provided the services and issued invoices in favour of Valia Industries Association. The Valia Industries Association has issued cenvatable invoices in favour of the appellant, and the appellant availed of Cenvat credit on the invoices.

The department contended that the service recipient is M/s. Valia Industries Association, so the credit cannot be allowed to the appellant, who is not a service recipient.

The appellant submitted that though the invoices were issued in favour of Valia Industries Association, the service was received by the appellant and the proportionate cost of service was borne by the appellant only. Therefore, the appellant has rightly availed of Cenvat credit.

The appellant submitted that Valia Industries Association was founded by its members only to avail common services for the benefit of members as per the deed of association dated 30.06.2008. The proportionate share of service charges along with service tax was paid by the members. Therefore, they are legally entitled to the Cenvat credit.

The appellant contended that the show cause notice was on the wrong facts as it alleged that service was provided to Valia Industries Association. However, the service was only available to members of the association.

The CESTAT found that the appellant, as per Industries Association, namely Valia Industries Association, is only an association which includes the appellant as its member. As per the Deed of Association, the association was founded in the name of M/s. Valia Industries Association for operating water supply for the common benefit of all the members. The association engaged Shree Rang Services to handle the water supply project. The Rang Services issued invoices for handling the water supply in favour of the Valia Industries Association.

"I find that since there is no dispute that Shree Rang Services issued valid cenvatable invoices in favour of M/s. Valia Industries Association and on the basis of proportionate distribution of expenditure, the appellant has availed credit," the CESTAT said.

The court held that the appellant has received the service and borne the expenditure, along with service tax, and they are entitled to a Cenvat credit.

Case Title: Gujarat Guardian Limited Versus C.C.E. & S.T.-Vadodara-ii

Citation: Excise Appeal No. 12030 of 2018-SM

Dated: 20.05.2022

Counsel For Appellant: Advocate S.J. Vyas

Counsel For Respondent: Superintendent (AR) R P Parekh

Click Here To Read/Download Order

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