Availment of CENVAT Credit of Service Tax Allowable on ISD invoice issued by head office without having ISD registration: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the availment of CENVAT credit of service tax allowable on Input Service Distributor (ISD) invoice which was issued by the head office without having any ISD registration. 

Unifrax India Ltd, the appellant assessee filed their monthly return and had provided all the details required therein, and the Service Tax return does not have any column for providing all the details for non-disclosure of any detail in the present case will not amount to suppression. 

The assessee appealed against the order passed by the Commissioner (Appeal) for demanding the reversal of the CENVAT credit of service tax paid by the assessee. 

Jigar Shah, the counsel for the assessee contended that before 2016, there was no restriction under CENVAT Credit Rules, 2004 in the distribution of credit of one unit to another unit under the provision of Rule 7 of CENVAT Credit Rules and therefore, on this count also the CENVAT credit cannot be denied. 

Also submitted that the assessee can avail of the CENVAT Credit on the ISD invoice which was issued by their head office without having ISD registration. 

Anand Kumar, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not entitled to get the CENVAT credit of service tax and the reversal of CENVAT credit raised by the revenue was as per the law and liable to be sustained. 

The Bench observed that merely because the ISD invoice was issued without having registration of the appellant’s head office, the fact of the payment of Service Tax will not get extinguished and the CENVAT credit cannot be disallowed. 

Also observed that in the case of Demosha Chemicals Pvt Ltd, the court held that merely because the ISD registration was not obtained the CENVAT Credit cannot be denied. 

The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) held that the demand for reversal of CENVAT credit was not as per the law and liable to be quashed while allowing the appeal filed by the assessee. 

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates