The Hyderabad bench of the Customs, Excise, And Service Tax Appellate Tribunal (CESTAT) quashed the order passed by the adjudicating authority for rejecting the CENVAT credit on invoices due to non-falling of service rendered within the definition of rule 2(l) of the CENVAT credit Rules, 2004.
Conneqt Business Solutions Ltd, the appellant assessee was a Business Process Outsourcing Company engaged in providing Third-Party Administrator (TPA) services to various insurance companies and they entered into agreements with Insurance Companies as well as with dealers or distributors of various vehicle manufacturers.
The assessee appealed against the order passed by the adjudicating authority for imposing penalties and interest on certain invoices raised by the car dealers.
B L Narasimha, the counsel for the assessee contended that the amount of service tax was indicated clearly along with the details of the PAN number, and service tax registration number of the dealer.
It was further submitted that there was no dispute by the Department that the Tax Invoices issued by the dealer conform to Rule 9 of CENVAT Credit Rules which specifies the conditions to be fulfilled to make the concerned document eligible for CENVAT Credit.
Further stated that if any CENVAT credit WAS taken by the receiver of the goods/recipient of the service, the same cannot be questioned at the end of the recipient.
G. Sudhakar, the counsel for the respondent relied on the decisions made by the lower authorities and contended that the service itself was not provided by the dealers and only invoices were raised and it was clear that more of a paper transaction without any service being rendered. Thus the CENVAT credit taken by the assessee was not legal and proper.
The bench observed that the assessee was eligible to take the CENVAT credit on the invoices raised by various car dealers, and distributors for the services provided by them.
The two-member bench comprising R. Muralidhar (Judicial)and A.K. Jyotishi (Technical) quashed the penalty and interest imposed by the adjudicating authority and allowed the appeal filed by the assessee.
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