The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax cannot be denied at the recipient’s end without opening an assessment at the service provider’s end.
Tata AIG General Insurance Co. Ltd, the appellant assessee was engaged in the business of providing general insurance services and it had been receiving infrastructure facilities and support services from various motor car dealers as well as availing input credits against payment of tax paid towards availing of such services along with other services like work stations, advertisement, etc.
The assessee appealed against the order passed by the adjudicating authority for denial of CENVAT Credit at the receiver’s end on the grounds of incorrect description of services in the invoices raised by the service provider.
Vinay Jain, the counsel for the assessee contended that the assessee had rightly availed the credits since the output service in completing the insurance business was becoming fruitful through those inputs but instead of raising invoices with the description as business support service defined under Section 65(104)C of the Finance Act, 1994.
Anand Kumar, the counsel for the department contended that the amount transferred to the vehicle dealers was dependent on the number of vehicles sold and insured and not based on the provision for supply of infrastructure or business support services.
The Bench observed that in the case of Future Generali India Insurance Co. Ltd. Vs. CC, the court held that the credit cannot be denied to the recipients end without opening the assessment at the service provider’s end.
The two-member bench comprising Suvendu Kumar Pati (Judicial) and Anil G Shakkarwar (Technical) held that without opening assessment of the provision of service extended by the service provider, CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver to avail the input services.
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