Whether input tax credit can be avail on Management Consultancy Services?

PJ/Case Law /2016-17/3304

Case:- COMMR. OF C. EX., BANGALORE VersusSANMAR SPECIALITY CHEMICALS LTD.

Citation:- 2016 (43) S.T.R. 347 (Kar.)

Issue:-Whether input tax credit can be avail on Management Consultancy Services?

Brief Facts:- - As all these appeals are directed against the common order dated 9-7-2015 passed by the Customs, Excise & Service Tax Appellate Tribunal, (hereinafter referred to as ‘the Tribunal’ for the sake of brevity) whereby the Tribunal for the reasons recorded in the order has allowed the appeals.
Theyhave heard Mr. M.V. Chandrashekara Reddy, learned Counsel appearing for the appellant yesterday and today the matter is kept for orders.

Appellant’s contention:-The contention raised on behalf of the appellant was twin fold : One was that the Tribunal ought not to have allowed the input tax credit for the Management Consultancy Services and the another was that, it could not be said that the proceedings were barred by limitation of one year, since as per the learned Counsel for the appellant, it was the case of suppression of material fact and therefore larger period was available to the Department for raising the demand.
In their view, both the contentions are of no substance for the simple reason that Management Consultancy Services obtained for infusing finance in the different units of the Company can be said as connected with the manufacturing activity and it cannot be excluded on the premise that it is not related to manufacturing activity.

Reasoning of judgment:-It is hardly required to be stated that the manufacturing activity would be an ultimate result, but it begins with the establishment of the unit by purchasing machinery, raw material and also the availability of finance. In the absence of fund procured may be of its own source or through financial institution, it may not be possible to reach to the ultimate result of manufacturing activity.
Therefore, it cannot be said that theManagement Consultancy Services so obtained has no nexus to the manufacturing activity. The Tribunal has rightly found that the input tax credit was available and they do not find that the view taken by the Tribunal could be said as erroneous.
It is an admitted fact that the input tax credit was claimed in the return of the assessee from time to time and therefore it was not a matter for suppression of facts, as sought to be canvassed on behalf of the appellant.
Once full facts were disclosed, thenormal period of limitation would be one year, whereas the proceedings are initiated after the expiry of a period of one year. Therefore, they do not find that the Tribunal has committed any error in observing that the demand was barred by limitation.
In view of the above read with the reasons recorded by the Tribunal, they do not find that any case is made out for interference. Hence, the appeals are meritless and therefore dismissed.

Decision:- Appeal dismissed.

Comment:- The analogy of the case is that Management Consultancy services procured for infusing finance in manufacturing company, is undoubtedly related to manufacturing activity. Arranging finance is, inter alia, one of step required to achieve ultimate result of manufacture. Thus said service having nexus with manufacture, is considered as an input service.Cenvat credit on Management Consultancy Services will therefore be admissible. Further inputtax credit is claimed in the return of the assessee from time to time and therefore it is not a matter for suppression of facts.

Prepared By:- Monika Tak

Comments

PJ/Case Law /2016-17/3304

Post a Comment

Query