Whether appellant is entitled to take Cenvat credit of service tax paid on input services on invoices issued by intermediary?

PJ/Case Law /2016-17/3261

Case:- Shri D.N. Panda, Member (J) JYOTHY LABORATORIES LTD. VersusCOMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY

Citation:-2016 (43) S.T.R. 256 (Tri. - Chennai)

Brief Facts:-The brief facts of the case are appellant availed broadcasting service and paid service tax. This service tax was paid on the basis of invoice raised by intermediary who arranged service for the appellant. This situation is disputed by Revenue on the ground that discharging of service tax by the intermediary shall not entitle the appellant to the Cenvat credit thereof.

Appelants Contention:- Appellant submits that who arranges the service is immaterial because the service whether taxable and provided to the appellant is material. Therefore, appellant is entitled to Cenvat credit of the tax paid to the intermediary to avail service of broadcasting by it for advertisement of its product.

Respondent Contention:- Revenue on the other hand says that appellant should have necessarily made direct arrangement without intermediary to get the taxable service. Therefore, it has to suffer the levy with penalty.

Reasoning of Judgment:- On perusal of case records it is found that the services availed by the appellant does not appear to be alien to its business. There was an advertisement made for the appellant through broadcasting service which is not in dispute by Revenue. Such service was provided by a third party for the appellant through an intermediary. The requirement of law is that there should be an integral connection with the activity of the appellant and the input service availed. Such a nexus is established in this case for which the appellant cannot be denied of benefit of Cenvat credit of the service tax paid.

Decision:-The appeal is allowed.

Comment:-The gist of the case is that the appellant hasavailed services through an intermediary from a third party. Service Tax is paid on invoices issued by such intermediary. Thus, the credit of Service Tax paid in respect of such services should not be denied when their nexus is established with output services provided as per Rules 3, 4 and 9 of Cenvat Credit Rules, 2004.

Prepared by:- Ritika Mehta

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PJ/Case Law /2016-17/3261

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