Whether Cenvat credit can be distributed for receipt of input services, under common invoice without registration as an ISD?

PJ/Case Law/2019-2020/3614

RAJASTHAN PATRIKA PVT. LTD. Versus COMMISSIONER OF C. EX. & CGST, JAIPUR Final Order Nos. A/51245-51246/2019-SM(BR), dated 15-5-2019 in Appeal Nos. ST/53597 & 51359/2018-SM

Brief facts: M/s Rajasthan Patrika Private Limited, a private limited company is engaged in the business of print media, organizing events and running FM Radio Stations. Through FM Radio stations it earns revenue from selling of time slots to the advertisers on which it was paying service tax, without claiming any exemption. The appellant has taken separate service tax registrations at all the four locations and was discharging service tax separately. However, the appellant is a private limited entity and has a common Income Tax PAN and Company Identification Number. As the vendors were providing input services to all the four FM Radio stations of the appellant, they raised a common bill for their services addressed to the Jaipur office (Head Office) of the appellant.
Issue:Whether Cenvat credit can be distributed for receipt of input services, under common invoice without registration as an ISD?
Reasoning Of The Judgment:It is admitted fact that the appellant have received the input services at all the four broadcasting centers. All the four broadcasting centers are registered with the Service Tax Department running taxable output services being 'sale of advertisement slots' etc. Admittedly, the service providers have raised the bill at their Jaipur office, which is the Head Office of the appellant company and they have paid the service charges including service tax to the service provider, and have taken Cenvat credit. Thus, there is only a procedural irregularity. Had the appellant taken centralized registration or got them registered as an ISD for their Jaipur Office, then there would have been no such difficulty and/or irregularity in availing the Cenvat credit. The appellant is one and the same having common PAN based registration number and also CIN number under the Companies Act. At best, the appellant could have got registered as an ISD and distributed the Cenvat credit proportionately to their other three radio stations and could have availed the Cenvat credit, thus adjusting the output tax payable. Thus, the situation is wholly revenue neutral. Learned Counsel further relies on the ruling of the Hon’ble Gujarat High Court in Commissioner of Central Excise v. Dashion Limited - 2016 (41) S.T.R. 884 (Guj.) wherein the issue before the Hon’ble High Court was -The High Court noticed that the objection of the Department was that the credit from one unit was utilized for the purpose of duty liability of other unit, without pro rata distribution by the input service distributor and observed that there is nothing in the Cenvat Credit Rules, 2004, which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Accordingly, it answers the question in favor of the assessee and against the Revenue. Accordingly, the Learned Counsel prays for allowing of the appeal with consequential relief. Same judgment passed by court considering the above case that that the situation is wholly Revenue neutral as all the four centres had paid service tax, also in cash and the Cenvat credit could have been distributed and thus availed by the other centres, and hence no gain. Accordingly, the appeals are allowed and the impugned orders are set aside. The appellant is entitled to consequential benefit, in accordance with law.
Comment:Since the issue is regarding distribution of Cenvat credit among different branches without registration for ISD is only procedural irregularity as they have paying output tax and registered in same PAN, so it can be allow to be distribute as there is no additional gain and ask them to register for ISD so that they can distribute credit properly.
Prepared by CA Kunal Karnawat

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PJ/Case Law/2019-2020/3614

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