As a relief to Vodafone Idea Limited, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to avail CENVAT credit on the debit notes issued by M/s GTL Infrastructure Ltd to them in which charges for electricity, diesel and rent had been adjusted by the terms of ‘infrastructure provision agreement’ between them and the provider.
The revenue challenged the order-in-original no. 74/STCIV/MRRR/16-17 dated 30th June 2016 of Commissioner of Service Tax – IV, Mumbai.
The respondent-assessee entered into agreements with owners of certain towers, to secure the towers for the installation of dishes/antenna. The owners/ service providers issued debit notes to the assessee/ service recipient, about reimbursements of diesel and electricity costs incurred by them, on which the service providers had paid service tax.
The assessee took CENVAT credit against the debit notes issued to it and the proceedings for recovery of credit availed by the assessee were initiated against it on the ground that the CENVAT credit was availed against the debit notes. On appeal, the Commissioner of Service Tax dropped the recovery proceedings againstthe assessee.
It was observed by the Bench of Ajay Sharma (Judicial Member) and C J Mathew (Technical Member) that availing of credit, against invoices or debit notes,contains substantially the same information as prescribed in rule 9 of CENAT Credit Rules.
Further observed that, while the adjustments reflect the separate charges as provided in the master service agreements, discharge of tax liability therein under the Finance Act, 1994 by the provider of service and raising of the amount as due from the recipient of the service was not in doubt.
It was settled law that once the tax has been collected, it was not within the jurisdiction of the tax authorities governing the recipient to contend that such payment of tax did not align with the law.
While dismissing the appeal of revenue, the Tribunal observed that the competent authority has not been able to draw a distinction between diesel as goods and any duties paid thereon being ineligible for availing of credit and a charge raised upon the recipient of the service as the value of the service on which tax liability under Finance Act, 1994 has been duly discharged.
Shri Anand Kumar, Additional Commissioner appearedfor the appellant and Shri S S Gupta, Chartered Accountant appearedfor the respondent.
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