Relief to Vodafone: CESTAT Clarifies CENVAT Credit on Debit Notes Valid Under Rule 9 if Essential Details Are Present, Sets Aside Demand Order [Read Order]

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that CENVAT credit on debit notes is allowable under Rule 9 of the CENVAT Credit Rules, 2004, if essential details are present. It set aside a demand order against Vodafone Mobile Services Ltd.

Vodafone Mobile Services Ltd., the appellant, is a telecommunication service provider availing CENVAT credit for services used in its operations. During an audit, the department alleged that the appellant availed inadmissible credit of Rs. 17.46 crore for the period April 2009 to March 2013 and Rs. 3.99 crore for April 2013 to March 2014.

Revenue claimed that credits were taken on improper documents, including debit notes, and for services used at unregistered premises. The department issued two show cause notices disallowing the credits and imposing penalties under Sections 76 and 78 of the Finance Act, 1994.

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The adjudicating authority upheld the department’s demands in an impugned Order-in-Original. Aggrieved, the appellant filed an appeal before the CESTAT arguing that its debit notes and invoices complied with the essential requirements of Rule 9 of the CENVAT Credit Rules, including details such as service tax registration numbers, descriptions of services, and values of taxable services.

The appellant relied on rulings in cases like Mportal India Wireless Solutions Pvt. Ltd. and Samsung India Electronics Pvt. Ltd., which upheld the principle that substantial compliance is sufficient for CENVAT credit claims. The revenue countered that debit notes were not valid documents for availing CENVAT credit under Rule 9 of the CENVAT Credit Rules.

The two-member bench comprising P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) found that the appellant’s debit notes and invoices contained all essential details required under Rule 9 of the CENVAT Credit Rules which qualifies them as valid documents for credit.

The tribunal observed that the appellant had reversed certain credits like Rs. 1,700 for health check-ups and Rs. 78,000 for club memberships along with interest further showing good faith. The CESTAT set aside the demand order and penalties, providing relief to the appellant. The appellant’s appeal was allowed.

To Read the full text of the Order CLICK HERE

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