By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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CENVAT Credit taken of Rs 2.59 crore against service tax paid for providing after sales service during warranty period – Appellants under contractual obligation to provide after sales service during the warranty period without any consideration – strong prima facie case in favour – pre-deposit waived and stay granted.
Facts:
The applicant contented that the service of providing after sales service during the warranty period without any consideration is in relation to business and, therefore, covered by the definition of input service. The applicant submitted that the decision of the tribunal in the case of Mercantile & Indus. Developers Co. Ltd. vs. CCE, Mumbai-III reported in 2011 (21) STR 564, to make pre-deposit of part amount for hearing of the appeal was set aside by the Hon’ble Bombay High Court vide order dated 3.3.2011, after taking into consideration the judgement of the Hon’ble High Court in the case of CCE, Nagpur v. Ultratech Cement Ltd. 2010 (20) STR 577 (Bom.), and directed the Tribunal to hear the appeal on merits without insisting on pre-deposit. The applicant also relied upon the stay order in the case of Samsung India Electronics P. Ltd. vs. CCE, Noida 2009 (126) STR 570, waiving the pre-deposit of dues on the same grounds. The revenue on the other end contended that activity for which service tax was paid was conducted after clearing manufactured TVC and therefore the same could not be treated as input service.
Held:
After referring to the definition of ‘input service’ under the CENVAT Credit Rules, it was held that since the applicant was under the contractual obligation of providing after sales service during the warranty period and as they are recipients of taxable service, prima facie their case is strong. Thus, the pre-deposit of the duty, interest and penalty was waived granting the stay.
