2015 (38) STR 1220 (Tri.-Mum.) Deloitte Haskins & Sells vs. CCE, Thane-I.

Facts:
Availment of CENVAT credit was under dispute as firstly invoices were addressed to the registered unit and the credit was taken in another unit. Further the Appellants had provided taxable as well as exempted services and thus the department contended that CENVAT credit could be utilised only to the extent not exceeding 20% of service tax payable vide Rule 6 of CENVAT Credit Rules, 2004 in the absence of maintenance of separate records. It was argued that though invoices were raised at another unit, the input services were received and consumed and a CA certificate was produced to this effect. Accordingly, it was merely a procedural defect. On the second issue, it was stated that in absence of a specific column in the service tax return, amount received for exempted services of prior period was shown under “exempted services” and actually, no services were claimed to be exempted during the period under consideration. Therefore, restriction on utilisation of CENVAT credit was not warranted. Moreover, it was argued that exemptions available were conditional and they had billed a consolidated sum including representational services without taking benefit of exemption and in respect of services provided to SEZ it was difficult to ensure fulfillment of conditions by service receiver and thus the said exemption was also not claimed. The department argued that firstly in view of separate registrations cross availment was not possible and secondly since unconditional exemption with respect to representational services and services provided to SEZ were available, service tax cannot be paid on such exempted services on their own volition. Accordingly, restriction of CENVAT credit was applicable. The Appellants argued that unlike section 5A of Central Excise Act, 1944, under service tax laws, availment of benefit of unconditional exemption is not mandatory.

Held:
Relying on the decisions of the Ahmedabad Tribunal in the case of DNH Spinners [2009 (16) STR 418] and Modern Petrofils [2010 (20) STR (627)], it was held that CENVAT credit cannot be denied on the grounds of procedural lapse as long as the services are eligible input services. Thus, CENVAT credit on principle was allowed subject to verification of the fact by the adjudicating authority that the input services were actually used. On the second issue, it was held that in absence of specific breakup of total amount for each job undertaken in the invoice, it cannot be concluded that the Appellants availed exemption regarding representational services. Revenue authorities cannot demand service tax on a composite amount, and it did not attempt to do any segregation, if at all it was possible, in consolidated invoices. Further, notification granting exemption to services provided to SEZs was conditional and the Appellants had opted to pay service tax. Relying on various decisions, it was held that under service tax laws, there is no compulsion to avail exemptions. Therefore, since this was not a case of provision of taxable as well as exempted services, restriction on CENVAT credit was not applicable.