In the case of M/s Bharat Sanchar Nigam Limited(BSNL), the Kolkata bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Cenvat Credit is allowable on Rent a cab services availed in course of business of providing output services. In terms of Rule 2(l)(b) of the Cenvat Credit Rules, 2004, the appellant being providing output service is entitled to take the Cenvat credit on service tax paid by them.
The appellant is engaged in providing services under the category of “Internet Telephone Services” and “Leased Circuit Services”. It has been held that the appellant has taken irregular credit and short-paid the service tax.
On scrutiny of records by the Audit, it was observed that the appellant is engaged in rendering taxable services and recovering charges from them. Apart from this, the appellant has also provided its network to other companies for inter companies/operators connectivity and simultaneously avail the same facility from them for identical purposes. In this process, they avail cenvat credit on various input services like Leased Circuit Service rendered by the other companies to them.
The appellant has availed irregular cenvat credit on the input services, namely, Annual Maintenance Services of Secondary Switching Area situated at different places in the State of Bihar and also availed irregular cenvat credit for Rent-a-Cab Services. The demand for service tax was confirmed holding that the appellant has taken irregular cenvat credit.
It was submitted by the Counsel for the appellant that the show cause notice is barred by limitation. The appellant has availed cenvat credit during the period 2007-08 and 2008-09 and the show-cause notice was issued by invoking an extended period of limitation on 11.07.2012, which is barred by limitation. He further contended that as the appellant has provided output services of leasing of ports and these ports are situated in telephone exchanges of various districts of Bihar and all maintenance charges have been paid by the appellant.
In that circumstances, the appellant is rightly entitled to take the cenvat credit on the said invoices and the vehicle has been used by them for official purposes. In those circumstances, the cenvat credit can not be denied.
It was found that the cenvat credit on annual maintenance charges sought to be denied only on the presumption that these parts are situated in different areas, they might have been registered with the Service Tax Department and have availed the cenvat credit thereon. Therefore, the annual maintenance of Cenvat credit was denied
The invoices have been issued in the name of the appellant the appellant has paid the annual maintenance charges and the Revenue has denied the credit to the appellant on the presumption and assumption, which is not sustainable in the eyes of the law. Therefore, the cenvat credit availed by the appellant on the annual maintenance charges is allowed.
A two-member bench comprising Mr Ashok Jindal, Member (Judicial) and Mr K Anpazhakan, Member (Technical) observed that the said service has been availed by the appellant in the course of their business of providing output services. Therefore, in terms of Rule 2(l)(b) of the Cenvat Credit Rules, 2004, the appellant providing output service is entitled to take the Cenvat credit on service tax paid by them.
The CESTAT held that the appellant had correctly taken the cenvat credit on Rent-a-Cab and set aside the order.
Shri A.K. Shahi appeared for the Appellant and Shri P.K.Ghosh, Authorized Representative appeared for the Respondent.
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