Whether credit can be availed by centralized office on basis of documents pertaining to unregistered branch office?

PJ/CASE LAW/2015-16/2863

Case:- KETAN MOTORS LTD. VERSUSCOMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation:-2015 (39) S.T.R. 858 (Tri. - Mumbai)

Brief facts:- The appellant is in appeal against Order-in-Appeal No. NGP/EXCUS/000/APPL/917/13-14, dated 11-11-2013 passed by Commissioner of Central Excise, Customs & Service Tax (Appeals), Nagpur, disallowing the credit of Rs. 1,24,886/- and Rs. 3,072/- and imposing a penalty of Rs. 1,32,453/- under Rule 15(3) of Cenvat Credit Rules, 2004.
There are three issues to be dealt with in this case. The first issue is availment of Cenvat credit of Rs. 1,27,958/- on documents pertaining to unregistered premises of the appellant at Chandrapur and Amravati. Whereas the service tax credit is taken in their centralized office at Nagpur. Secondly, the credit of Rs. 3,072/- pertaining to Nagpur office but the bills are not in the name of the appellant. Thirdly, the penalty of Rs. 1,32,453/- imposed on the appellant under Rule 15(3).
Heard both the sides and considered the submissions.

Appellant’s contention:- The learned Counsel submits that they have a centralized accounting office in Nagpur with branch offices at Chandrapur and Amravati. The services received and the input service tax credit availed thereon are reflected in Nagpur centralized accounting system. Similarly, the service tax on output service provided from Chandrapur and Amravati is paid from the Nagpur centralized office. He submits that they had applied for centralized registration in 2004, a copy of which is placed on record at page 49 of the appeal papers. The centralized registration was granted to them after follow up with the service tax department, on 26-3-2013. According to him the department has not raised any dispute regarding receipt of services at the branch office, the admissibility of credit on these services or the payment of service tax on output services provided from the branch office. The complete accounting is done in their Nagpur office. The only objection of Revenue is that they did not have a centralized registration and therefore, the input credit is not admissible.
As regards penalty he stated that the penalty has been wrongly imposed under Rule 15(3) of the Cenvat Credit Rules which relates to input services only.

Respondent’s contention:-The learned AR appearing on behalf of the Revenue reiterates the findings of the Commissioner and states that the appellant should have reconciled the figures of input service credit output service value and output service tax paid as reflected in their accounts with the ST-3 returns.

Reasoning of judgment:-As regards the first issue, they find that an application dated 16-12-2004 made by the appellant requesting for grant of centralized registration from 1-7-2001, is on record and the letter bears the stamp of the receipt by the department. In any case, the fact of this application having been made is mentioned in the order-in-original and is not disputed. However, the order-in-original states that the centralized registration was not applied for in the proper format and that the appellant had not produced any documents to the effect that they had applied for centralized registration. They find from the letter dated 16-12-2004 that the appellant has stated that they may be given permission to have only one registered place in terms of Rule 3(a) of the Service Tax Rules. This request can be considered as an application for centralized registration. Not applying in the proper format is not a reason to deny substantial benefit which should follow from the centralized registration. In any case, the centralized registration was granted subsequently on 26-3-2013. The department has not disputed that the input services were received at the branch office and further that they were utilised for providing output services. In fact perusal of the accounting records maintained at the Nagpur office shows the receipt of the services at branch office. Therefore, they see no reason to disallow the Cenvat credit of Rs. 1,24,886/- on the documents pertaining to the branch offices.
As regards the credit of Rs. 3,072/-, the learned Counsel stated that these pertain to services of telephone. The bills were addressed in the Director’s name but the office mentioned is the office premises of the appellant. Therefore, there is no ground to deny the service tax credit in this case and the same is allowed.
Having allowed the service tax credit, the question of imposing penalty does not arise.
The appeal is allowed.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that appellant has take centralized registration and is eligible to avail credit pertaining to branch office. Notapplying in proper format for centralised registration cannot be reason to deny substantial benefit of cenvat credit. It is also undisputed that the Centralized registration was granted subsequently and input services received at branch office were utilized for providing output services. There is no reason to disallow credit on documents pertaining to branch office. The credit was also allowed on the telephone bills addressed in Director’s name but had mentioned office premises of assessee.

Prepared by:- Monika Tak

PJ/CASE LAW/2015-16/2863

Case:- KETAN MOTORS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation:- 2015 (39) S.T.R. 858 (Tri. - Mumbai)

Issue:- Whether credit can be availed by centralized office on basis of documents pertaining to unregistered branch office?

Brief facts:- The appellant is in appeal against Order-in-Appeal No. NGP/EXCUS/000/APPL/917/13-14, dated 11-11-2013 passed by Commissioner of Central Excise, Customs & Service Tax (Appeals), Nagpur, disallowing the credit of Rs. 1,24,886/- and Rs. 3,072/- and imposing a penalty of Rs. 1,32,453/- under Rule 15(3) of Cenvat Credit Rules, 2004.

There are three issues to be dealt with in this case. The first issue is availment of Cenvat credit of Rs. 1,27,958/- on documents pertaining to unregistered premises of the appellant at Chandrapur and Amravati. Whereas the service tax credit is taken in their centralized office at Nagpur. Secondly, the credit of Rs. 3,072/- pertaining to Nagpur office but the bills are not in the name of the appellant. Thirdly, the penalty of Rs. 1,32,453/- imposed on the appellant under Rule 15(3).

Heard both the sides and considered the submissions.

Appellant’s contention:- The learned Counsel submits that they have a centralized accounting office in Nagpur with branch offices at Chandrapur and Amravati. The services received and the input service tax credit availed thereon are reflected in Nagpur centralized accounting system. Similarly, the service tax on output service provided from Chandrapur and Amravati is paid from the Nagpur centralized office. He submits that they had applied for centralized registration in 2004, a copy of which is placed on record at page 49 of the appeal papers. The centralized registration was granted to them after follow up with the service tax department, on 26-3-2013. According to him the department has not raised any dispute regarding receipt of services at the branch office, the admissibility of credit on these services or the payment of service tax on output services provided from the branch office. The complete accounting is done in their Nagpur office. The only objection of Revenue is that they did not have a centralized registration and therefore, the input credit is not admissible.

As regards penalty he stated that the penalty has been wrongly imposed under Rule 15(3) of the Cenvat Credit Rules which relates to input services only.

Respondent’s contention:- The learned AR appearing on behalf of the Revenue reiterates the findings of the Commissioner and states that the appellant should have reconciled the figures of input service credit output service value and output service tax paid as reflected in their accounts with the ST-3 returns.

Reasoning of judgment:- As regards the first issue, they find that an application dated 16-12-2004 made by the appellant requesting for grant of centralized registration from 1-7-2001, is on record and the letter bears the stamp of the receipt by the department. In any case, the fact of this application having been made is mentioned in the order-in-original and is not disputed. However, the order-in-original states that the centralized registration was not applied for in the proper format and that the appellant had not produced any documents to the effect that they had applied for centralized registration. They find from the letter dated 16-12-2004 that the appellant has stated that they may be given permission to have only one registered place in terms of Rule 3(a) of the Service Tax Rules. This request can be considered as an application for centralized registration. Not applying in the proper format is not a reason to deny substantial benefit which should follow from the centralized registration. In any case, the centralized registration was granted subsequently on 26-3-2013. The department has not disputed that the input services were received at the branch office and further that they were utilised for providing output services. In fact perusal of the accounting records maintained at the Nagpur office shows the receipt of the services at branch office. Therefore, they see no reason to disallow the Cenvat credit of Rs. 1,24,886/- on the documents pertaining to the branch offices.

As regards the credit of Rs. 3,072/-, the learned Counsel stated that these pertain to services of telephone. The bills were addressed in the Director’s name but the office mentioned is the office premises of the appellant. Therefore, there is no ground to deny the service tax credit in this case and the same is allowed.

Having allowed the service tax credit, the question of imposing penalty does not arise.

The appeal is allowed.

Decision:- Appeal allowed.

Comment:- The analogy of the case is that appellant has take centralized registration and is eligible to avail credit pertaining to branch office. Not applying in proper format for centralised registration cannot be reason to deny substantial benefit of cenvat credit. It is also undisputed that the Centralized registration was granted subsequently and input services received at branch office were utilized for providing output services. There is no reason to disallow credit on documents pertaining to branch office. The credit was also allowed on the telephone bills addressed in Director’s name but had mentioned office premises of assessee.

Prepared by:- Monika Tak

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