The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) allowed the Cenvat Credit on Service Tax charged by Tata Motors as the services was clubbed under the Business Support Service ( BSS ).
Mr. Rahul Tangri & Ms. Udita Saraf appeared for the Appellant. Mr. P. K. Ghosh, Authorized Representative for the Respondent. The appellant M/s. TML Drivelines Ltd. is a subsidiary unit of Tata Motors Ltd. During the period under dispute, Tata Motors were providing various services commonly for their related units and recovering the cost from them on proportionate basis. Since it was reimbursement of the cost, Tata Motors were not paying any Service Tax. The Department took the view that this would amount to provision of service under the category of “Business Support Service‟.
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A Show Cause Notice was issued to them on 14/09/2010 for the period 01/05/2006 to 09/05/2008 demanding the service under „Business Support Service (BSS). In order to avoid further litigation, Tata Motors started paying Service Tax under heading of “BSS”. During the period under consideration, they have raised their monthly bills on the appellant showing that they have undertaken the service of BSS for the appellants, showing the value of the service along with Service Tax thereof. The appellants have taken the Cenvat Credit on Service Tax charged by the Tata Motors. The Department held that the appellant is not entitled for Cenvat Credit on the ground that the BSS services have no nexus with the output service/manufacturing activities of the appellant.
The Revenue also took a stand after amendment of Rule 2(l) of Cenvat Credit Rules, 2004 with effect from 01/04/2011, wherein “Business activities” have been excluded from the definition of input service, the appellant would not be eligible for Cenvat Credit. After due process, the Adjudicating Authority passed the impugned order denying the credit and confirming the demands. Being aggrieved, the appellant is before the Tribunal.
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Counsel appearing on behalf of the appellant submitted that for the total expenses incurred by Tata Motors sharing the expenses among various entities and recovering the cost from the appellant for many years. The Tata Motors were stating that it was a simple bifurcation of the total cost incurred between various entities and they do not treat it as any service. However, it was the Department which insisted that such cost sharing would amount to provision of BSS and issued the Show Cause Notice to Tata Motors. Thereafter, Tata Motors started paying the Service Tax and they started issuing invoices showing the details of BSS provided to the appellant charging the Service Tax under these invoices. Therefore the Revenue has not denied that the service was being provided by Tata Motors Ltd. to the appellant.
The AR reiterated the findings of the lower authorities. He submits that the appellant has provided various services which include catering services, sport service and other miscellaneous services are not eligible for Cenvat Credit. Therefore, he justifies the confirmed demands.
A two member bench of Mr. R. Muralidhar, Member ( Judicial ) and Mr. Rajeev Tandon, Member ( Technical ) observed that there is nothing to indicate that Revenue had any objection towards such classification by Tata Motors and officers were accepting their Returns towards such services. Therefore, the bench treated that as a whole Tata Motors have provided the service of BSS to the Appellant.
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The Tribunal viewed that this issue has also been considered by the Bench in case law of Hindalco Industries Ltd. V. CCE, wherein the bench held that “the services rendered by the ABMCPL is rightly classifiable under the category of ‘Business Support Service’ and ABMCPL has rightly paid Service Tax under the said category. The service tax paid by ABMCPL has been rightly distributed to their group companies, including Appellant. 15. The Appellant has raised the issue of limitation. They stated that the period involved in the Notice is from March 2007 to March 2012 whereas the Show cause Notice was issued on 22.02.2012 and 29.06.2012. Thus, part of the demand in the Notices is beyond the normal period of limitation. We observe that the availment of CENVAT credit by the Appellant based on the invoices issued by ABMCPL is known to the Department. There is no suppression of facts involved in this case.”
The bench set aside the impugned orders and allowed the appeals with consequential relief.
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