By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Can sales office be registered as “Input Service Distributor”?
Facts:
The Respondent, an authorised distributor for ‘Bajaj’ two and three wheelers operated from Vijayawada for 19 zones in the District to undertake sales and servicing of the vehicles. The respondent registered themselves as “Input Service Distributor” (ISD) in respect of their office premises at Vijayawada. It was held that it being a sales office could not be treated as service provider and therefore could not be granted registration as ISD and revoked the registration. Consequent upon the revocation, a credit of Rs. 48,143/- distributed as service tax credit to one of the authorised service stations was denied and ordered to be recovered. Appeal to Commissioner (Appeals) was allowed and therefore revenue filed the present appeal.
Held:
The Tribunal observed that the definition of the “Input Service Distributor” as defined in Rule 2(m) of the CENVAT Credit Rules, 2004 reads: “Input Service Distributor” means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under Rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purpose of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be.” The reading of the definition clearly indicates that it is to be an office of the manufacturer or producer of final products. The sales office of the respondent was also undisputedly an office of the assessee/ service provider and therefore, there should be no objection to the said premises being treated as premises of “ISD”. Rejecting the revenue’s appeal, the credit distributed by ‘ISD’ was also held as regular.
