Cenvat Credit on Service Tax cannot be denied due to Procedural Irregularities: CESTAT allows Cenvat Credit to Reliance HR Services Ltd [Read Order]

In the case of Reliance HR Services Ltd, the Customs, Excise &Service Tax Appellate Tribunal (CESTAT) allowed the Cenvat Credit and held that the Cenvat Credit on Service Tax cannot be denied due to Procedural Irregularities.

The appellants engaged in the provision of a ‘manpower recruitment agency‘ and ‘commercial training or coaching’ services.  During the audit, it was noticed that the appellants have wrongly availed Cenvat credit on input services and invoices issued in the name of locations not included in the Centralized registration. 

A show cause notice was issued to the appellants and was confirmed by the Additional Commissioner.  On appeal, the Commissioner (Appeals) upheld the order of the original authority.  Shri Gopal Mundhara, counsel for the appellant submitted that the issue regarding the eligibility of Cenvat credit in respect of services received prior to registration is no longer res integra and Rule 4A of the Service Tax Rules, 1994 does not impose any obligation that the service recipient require to be registered. 

It was a well-settled law that on account of procedural irregularities/lapses substantive benefit cannot be denied,  the appellant availed Cenvat credit of service tax paid on the inputs/input services prior to registration at some locations with the service tax department. Further observed that the eligibility of credit usage of such services for providing taxable output services is not under dispute and the nonregistration of the branches is only a procedural lapse.  

As per Rule 4A(1) of Service Tax Rules, 1994 the invoice or the challan shall be serially numbered and shall contain the name, address and registration number of such person name and address of the person receiving taxable service; description and value of taxable service provided or agreed to be provided and the service tax payable. 

The CESTAT found that proviso to Rule 9(1) of Cenvat Credit Rules provides that even if the duty-paying documents do not contain all particulars but contain the details of duty or service tax paid orpayable, description of the goods or taxable service, assessable value, name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service, credit may be allowed. 

A two-member bench Justice Dilip Gupta, President and Mr P Anjani Kumar, Member (Technical) held that “the acknowledgement of due discharge of tax liability on ‘output service‘ for which the impugned services were procured and, in the absence of evidence to the contrary, deployed suffices to entitle the appellant under the scheme of Cenvat credit.”

While allowing the appeal, the court set aside the impugned order.

To Read the full text of the Order CLICK HERE

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