CENVAT credit Availed on Service Tax paid on Invoices Issued by Car dealers with Proper Description of Service as ‘Data Processing and Policy Servicing Activities’: CESTAT Quashes Demand of CENVAT credit [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand of the CENVAT credit of Service Tax paid on the invoices issued by the car dealers on the ground of proper description of service in the invoice as data processing and policy servicing activities. 

Royal Sundaram General Insurance Company Ltd, the appellant assessee was engaged in providing General insurance like Motor, Health, Personal Accident and Fire, and Burglary insurance services and Miscellaneous policies and centralized registration, and are registered for payment of service tax under reverse charge mechanism on commissions paid to insurance agents, etc. 

The assessee appealed against the order passed by the adjudicating authority for confirming the demand of wrongly availed CENVAT credit and for the imposition of penalty. 

Raghavan Ramabadran, the counsel for the assessee contended that Once the nature and description of services as mentioned in the invoice were not disputed at the service provider's end, the same cannot be questioned at the service recipient's end. 

Further submitted that only one invoice describing the service as ‘data processing and policy servicing services’ was issued to the assessee and they are not aware of a second set maintained by the dealer, thus the assessee cannot be penalized by denying credit for the invoice maintained by the service provider, on their own volition. 

R. Subramanian, the counsel for the department contended that the dealers had raised the invoices describing the services as ‘data processing and policy servicing activities’. 

Also stated that in reality, the dealers do not provide any such service and only provide insurance services, and the taxable value and the service tax were calculated as a percentage of own damage (OD) premium and intimated by the assessee to the dealers through e-mail. 

Sulekha Beevi (Judicial member) bench held that the assessee was rightly availed CENVAT credit and the demand of credit on the assessee was not as per the law and liable to be deleted. 

The two-member bench comprising Sulekha Beevi (Judicial) and Ajith Kumar (Technical) quashed the demand for CENVAT credit imposed on the assessee. 

To Read the full text of the Order CLICK HERE

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