TMI Blog2019 (11) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... t on shared expenses is not legally sustainable - Appeal allowed - decided in favor of appellant. - ST/20154/2016-DB, ST/20911/2018-DB - Final Order No. 21026-21027/2019 - Dated:- 22-11-2019 - MR. S.S GARG, JUDICIAL MEMBER AND MR. P. ANJANI KUMAR, TECHNICAL MEMBER For the Assessee : Shri Jose Jacob, Advocate For the Revenue : Shri P. Gopakumar, Jt. Commissioner(AR) ORDER This order will dispose of two appeals, one filed by the assessee (ST/20154/2016) and another by the Department (ST/20911/2018). Since the issue involved in both the appeals is identically, both the appeals are taken up together for discussion and disposal. For the sake of convenience, we take up the facts of the assessee s appeal first, in which impugned order dt. 17/10/2015 was passed disposing of two show-cause notices. 2. Briefly the facts of the present case are the appellant/assessee, previously known as M/s. J.R.G. Wealth Management Ltd., is a limited company engaged in providing services in relation to Forward Contract and are registered with the Service Tax authorities. On verification of the financial records of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the sister concerns with respect of sharing of certain common input services. Further the allegation of the Department is that the appellants have availed credit amounting to ₹ 33,47,354/- on input services which are received by the sister concerns and the appellant and entire credit was availed by the appellant on the basis of invoices issued by the service provider to the assessee. On these allegations, two show-cause notices No.198/2014/ST dt. 02/09/2014 and No.29/2015/ST dt. 03/03/2015 were issued and after giving opportunity of hearing to the appellant, the Commissioner confirmed both the demands by disallowing the cenvat credit of ₹ 1,15,61,301/- and also imposed penalty of ₹ 1,15,61,301/- in SCN dt. 02/09/2014 and disallowed the cenvat credit of ₹ 81,92,624/- in SCN dt. 03/03/2015 and also demanded appropriate interest under Section75 of the Finance Act, 1994. The Commissioner also imposed penalty of ₹ 10 lakhs on the appellant/assessee under Rule 15(1) of the CENVAT Credit Rules, 2004 (CCR). Aggrieved by the said order, the appellant/assessee has filed the appeal No.ST/20154/2016. 3. Heard both sides and perused the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table to them. He also submitted that during the hearing, the Tribunal has raised the following queries: (a). whether cenvat credit availed by the appellant based on the debit notes issued by sister concerns matches with the tax paid by the sister concern on debit notes raised on the appellant; (b). the tax paid on debit notes issued by the appellant on sister concerns does not exceed the tax credit availed by the appellants on services which are shared. To satisfy the queries raised by the Tribunal, the appellant has enclosed a certificate issued by the independent Chartered Accountant certifying that credit received by the appellants from sister concerns matches with the tax paid by the sister concern on debit notes raised on the appellants and tax paid on debit notes raised by the appellants on sister concerns does not exceed the tax credit availed by appellant on services which are shared. 4.2. He further argued during the course of hearing, Revenue argued that the credit on input services distributed by the sister concerns cannot be availed by the appellants when former was not registered as ISD. In reply to this, the learned counsel submitted that it is well sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ja Electronics Ltd. Vs. CCE, Tirupathi [2016(43) STR 601 (Tri. Hyd.)] wherein it was held that in case of sharing of common expenses by the group companies, credit cannot be denied at the service recipients end alleging that no services has been received. 5. On the other hand, the learned AR defended the impugned order and submitted that there is no provision in the CCR, 2004 for sharing or distribution of input services and cenvat credit among sister concerns. The rules provide a mechanism for distribution of input credit among branches of the same unit only. He further submitted that the business model adopted by the appellant is not covered under the provisions of CCR because the mechanism for distribution of credit is provided only through ISD, which will be applicable for the main company registered centrally and the branch companies coming under that and in the present case, this is not the case. He also submitted that the appellant has declared the cenvat credit as credit taken as input services received from ISD in the service tax returns filed by the appellants/assessee, which is a misdeclaration. He further submitted that there is no provision in the CCR f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of issuance of debit notes, which are also on record, service tax is separately charged on the amount recouped from other entities and the service tax so collected has been discharged under the category of business support service and the same is reflected in the relevant service tax returns. We also find that the debit note contains all the prescribed details under the CENVAT Credit Rules, 2004 and based on such debit notes issued by the sister concerns, the appellants have availed cenvat credit. We further find that the learned Commissioner denied the CENVAT credit alleging that sister concerns have not provided any input service to the appellants and the distribution of expenses among group companies is a business model adopted by the group of companies for better utilization of resource and for minimizing expense and such mechanism is not covered under the provisions of CCR. This finding, according to us, is not tenable in law in view of various decisions relied upon by the appellant cited supra. Further we find that when the service tax has been discharged by the sister concerns by way of raising the debit notes, then we can infer that they have provided the services to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput services received from ISD in service tax returns filed by the appellant, the learned counsel for the appellant in reply to the objection of the Revenue has submitted that the appellant had inadvertently declared the entire cenvat credit availed by the appellant during the course of October 2009 to March 2012 under heading credit taken as input services received from ISD . On being pointed out by the internal audit, the appellant had rightly classified the credit under the heading 1.3.2.2.3- on input services received directly from April 2012 onwards. Since the appellant have rectified the bona fide mistake on being pointed out by the audit, we do not find any mala fide intention that the appellant have suppressed the facts. Further we find that in view of the various decision relied upon by the appellant cited supra, it has been consistently held by the Tribunal that debit note issued by the sister concerns is a valid document under Rule 9 of CCR to avail cenvat credit if it contains all the details of the service as well as tax amount as required under rule 9. We also note that on identical facts, the Tribunal at Hyderabad in the case of Amara Raja Electronics Ltd. Vs. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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