Credit Cannot be denied for Photocopies of Invoices if Tax Payment is Accepted and Unchallenged: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that CENVAT credit cannot be denied solely on the basis that invoices were photocopies, provided that the service tax payment has been duly made and accepted by the revenue authorities without challenge.

SKF Technologies Pvt. Ltd., the appellant, is engaged in manufacturing and had availed CENVAT credit amounting to Rs. 91,43,339 on Management Consultancy Services received from foreign service providers under the Reverse Charge Mechanism ( RCM ). The company allocated a portion of the service tax paid to its Ahmedabad unit, while the invoices were originally addressed to the Bangalore unit.

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The revenue department partially rejected the credit, alleging that the services lacked a direct nexus with manufacturing and that invoices were addressed to the Bangalore unit, which had not issued Input Service Distributor ( ISD ) invoices under Rule 4A of the Service Tax Rules, 1994. The Commissioner of Central Excise (Appeals) upheld this denial, citing non-compliance with documentation and procedural requirements.

The appellant approached the CESTAT arguing that CENVAT credit on input services does not require a direct nexus with manufacturing under Rule 2(l) of the CENVAT Credit Rules, 2004, and that services aiding business growth qualify as input services. The counsel argued that tax had been duly paid under the Reverse Charge Mechanism, and since the challans were issued in the name of the Ahmedabad unit, the requirement for ISD registration did not arise.

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Regarding the documentation issue, the appellant argued that credit could not be denied merely due to photocopies of invoices, especially when original invoices were available at the time of adjudication.

The two-member bench, comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) observed that CENVAT credit cannot be denied when service tax has been paid and accepted by the government.

The tribunal held that invoices issued in the name of the head office were valid for claiming credit at the unit where the service was actually utilized. The tribunal also observed that photocopies of invoices could not be the sole ground for denial if the authenticity of tax payment was not in question.

The department failed to provide any evidence to prove that the services did not qualify as input services. The tribunal ruled that the credit of Rs. 91,43,339 was correctly availed and set aside the impugned order. The appeal was allowed.

To Read the full text of the Order CLICK HERE

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