The Madras High Court recently ruled that ‘Business Auxiliary Services’ and ‘Engineering Consultation Services’ qualify as ‘Input Services’ under the CENVAT Credit Rules, thereby making them eligible for CENVAT credit.
The appeal deals with whether the CESTAT was correct in holding that the input service tax credit availed by the assessee for these two services falls within the scope of Section 66A of the Finance Act, 1984. It was filed by the Commissioner of GST and Central Excise against the CESTAT.
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Initially, the adjudicating authority ruled in favour of the Revenue and against the assessee. However, this decision was reversed by the appellate authority, and the matter was eventually brought before the Tribunal.
The Tribunal, in its final decision, followed the precedent set in the case of M/s. Ultratech Cement Ltd. v. Commissioner of Central Excise, Jodhpur. In that case, it was held that services under the categories of ‘Business Auxiliary Services’ and ‘Engineering Consultation Services’ should be considered as input services eligible for CENVAT credit.
The Tribunal adopted this reasoning and accepted the order passed by the Commissioner of Central Excise (Appeals), thereby rejecting the appeal filed by the Revenue and allowing the assessee’s appeal.
Both the counsel for the appellant Revenue and the respondent assessee presented their arguments before the High Court. Justices R Suresh Kumar and C Sarvanan observed that the Tribunal’s decision was consistent with the principle established in the Ultratech Cement Ltd. case.
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It held that the services availed under the headings ‘Business Auxiliary Services’ and ‘Engineering Consultation Services’ rightly fell under the category of input services, allowing for the availment of CENVAT credit.
The High Court found no fault in the approach of the Tribunal and upheld its decision. Consequently, the High Court dismissed the appeal, ruling in favour of the assessee and against the Revenue. The court also noted that there were no costs to be imposed.
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