Vodafone Idea ₹13 Crore CENVAT Credit on Service Tax Dispute: CESTAT Upholds Relief  granted by Co-ordinate Bench [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai recently upheld a relief order favoring Vodafone Idea Limited in a ₹13.91 crore service tax dispute, dismissing the Revenue Department’s appeal.

The present Service Tax Appeal was instituted by the Commissioner of CGST & Central Excise, Mumbai Central before the Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) against a Review Order passed by the Commissioner of Service Tax, Mumbai-IV, Mumbai.

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The case arose following a CERA (Central Revenue Audit) conducted on the assessee wherein the Revenue objected to the CENVAT credit availed on the basis of debit notes issued  by the respondent’s supplier M/s GTL Infrastructure Limited, Mumbai and the credit taken on service tax paid in respect of diesel and electricity charges.

Subsequently, proceedings were initiated for denying the supposedly inadmissible CENVAT Credit of ₹13,91,68,093/- for the period April, 2006 to September, 2011. These proceedings culminated in the Order-in-Original dated 31 May 2016, wherein the Commissioner of Service Tax, Mumbai-IV dropped all proceedings and accepted Vodafone Idea’s claim.

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Aggrieved by the decision of the original authority, the Revenue, represented by Special Counsel Shambho Nath, had filed the present appeal before the Tribunal.

Meanwhile, Chartered Accountant Mehul Jivani represented Vodafone Idea.

The Bench comprising S.K. Mohanty, Member (Judicial), and M.M. Parthiban, Member (Technical) laid reference to the observations of the Commissioner in the impugned Order where it is stated that Vodafone Idea had entered into agreement with the Vendor for obtaining the service of Passive Infrastructure Support services.

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It was observed that the vendor’s consumption of diesel and electricity was inextricably linked to the service provided, and that the reimbursement of such expenses, documented through debit notes bearing statutory compliance, constituted part of the value of taxable services.

Additionally, the Commissioner had noted that the debit notes issued by the vendor contained all the relevant details as prescribed/required under Rule 4A of the Service Tax Rules 1995, hence qualifying to be a specified document for availing CENVAT Credit under Rule 9 of the CENVAT Credit Rules, 2004.

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Furthermore, CESTAT observed that the matter was no longer res-integra as the Tribunal had passed a similar order in the Assessee’s own case on identical facts, and thus refused to take a divergent view while rendering the present decision.

To Read the full text of the Order CLICK HERE

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