AEGIS LIMITED 2019 (27) G.S.T.L. 225 (Tri.

PJ/Case Law/2019-2020/3540

AEGIS LIMITED 2019 (27) G.S.T.L. 225 (Tri. - Hyd.)

Case: AEGIS LIMITED
Citation:2019 (27) G.S.T.L. 225 (Tri. - Hyd.)
Issue:1.Appellant AGEIS LIMITED (resultingcompany) availed unutilized CENVAT credit of BPO division of M/s. Global Vantedge Pvt. Ltd. (demerged company) which merged into AEGIS LIMITED after getting approval from high court. Whether such credit is allowable or not under Rule 10 of Cenvat Credit Rules,2004?
2.The Appellant availed wrong amount of credit as the amount of credit in ST-3 was less than the amount of credit which has been availed by the Appellant.
Brief Facts:The demerger from the parent company and merger with the appellant was by virtue of the orders of the Hon’ble High Courts. Between the appointed date and effective date i.e., from 1-4-2007 to 4-4-2008 M/s. Global was to carry on the business activities in the normal course of business for and on account of and in trust of the appellant company.
Respondent’s Contention and Jugdement :
Issue no. 1:Rule 10(2) of CCR, 2004 squarely covers such cases also.The companymay decide to sell one of its businesses to another firm. In such cases, the business which has been sold gets demerged from the parent company and merges with the buyer company.In this case, we find that Para 1.1.6.3 of the merger agreement specifically covers transfer of all assets and liabilities to the new entity including the Cenvat benefits. This agreement has been approved by the Hon’ble High Court and therefore is final unless such agreement is reversed by a higher judicial forum. Under these circumstances, no force in the argument in the show cause notice states that the transfer of the benefits under Rule 10 of the CCR, 2004 would apply only if the entire business is sold and does not apply if the seller company sells only one of this businesses (in this case, the BPO Division).
Issue No. 2:M/s. Global had not taken Cenvat credit of the input service utilized by their BPO division as it was decided to sell the same to the appellant. The BPO division also did not take Cenvat credit because they did not need credit because they were engaged only in export of services which did not require utilization of this Cenvat credit. The second component of credit availed by the appellant pertains to the input services which were used by them to render output services from 1-4-2007 onwards. The ST-3 returns filed by the appellant disclose the amount of Cenvat credit availed. The returns do not require invoice of the details of the Cenvat credit availed to be provided in order to the copies of the invoices to be submitted along with the returns. Further in respect of second question Tribunal decided that there was sufficient balance in the account of M/s. Global in their ST-3 returns as on 31-3-2008 and therefore the credit availed by the appellant is justified .
Decision:The appeal is allowed and the impugned order is set aside.

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