By TIOL News Service

MUMBAI, NOV 20, 2013: THE appellant rendered ‘Business Auxiliary Service' to M/s. HDFC Bank Ltd.

For rendering of the service, the appellant occupied part of the premises of their client from where services were rendered.

M/s. HDFC Bank , the client, charged the appellant rentals for the area occupied by the appellant on a monthly basis.

At the end of the month, HDFC Bank raised debit notes on the appellant at the appellant's registered office at Chandivli, Mumbai. The said debit notes contained an annexure wherein details of the service rendered, monthly licence fees charged and the service tax amounts were indicated. The appellant availed CENVAT credit of the service tax paid on the monthly rentals charged on them by M/s. HDFC Bank Ltd. by treating the same as ‘input service'.

The department was of the view that the appellant was not eligible for the CENVAT credit on two grounds. Firstly, the debit notes containing the annexure is not a ‘prescribed document' for availing CENVAT credit. Secondly, the individual premises for which rentals were charged and from where the services were provided, were not registered by the appellant.

Accordingly, a show cause notice dated 12/10/2009 was issued demanding service tax of Rs.3,33,79,536/- for the period 2004-05 to 2008-09.

The Commissioner of Service Tax, Mumbai-II did not bat an eyelid while confirming the demand along with interest and equivalent penalty. This order is dated 20/12/2011.

Pursuant thereto, the appellant filed an appeal before the CESTAT.

When the matter was listed for consideration of Stay application on 14/01/2013, on department's request the matter was adjourned. However, the Tribunal passed an order granting interim stay on the matter till the disposal of the stay application videorder dated 14/01/2013.

In the meanwhile, armed with the Board's draconian Circular 967 dated 01/01/2013, the department issued an attachment notice to the banker HDFC Bank Ltd., Worli, Mumbai and the said bank remitted a sum of Rs.6,03,66,313/- by DD no. 596986 dated 12/01/2013 and which was deposited by the jurisdictional authorities in the exchequer account.

On 28/01/2013, the appellant brought this departmental excess to the notice of the Bench and the Tribunal while passing a dasti order directed thus -

"…Inasmuch as the interim stay has been granted vide this Tribunal order dated 14/01/2013, we direct the Revenue to refund the amount received from the HDFC and not to proceed with recovery measures during the pendency of the stay application forthwith."

We reported this order as 2013-TIOL-268-CESTAT-MUM in DDT 2043 dt. 12/02/2013.

Incidentally, it appears that there was more tribulation awaiting the appellant.

The appellant had sought to withdraw the Miscellaneous Application filed by them but inadvertently the Tribunal dismissed the appeal as withdrawn.

So, the appellant filed a ROM application and this was heard on 25/07/2013 and when the following order was passed -

"3. On perusal of the records we find that the miscellaneous application no. ST/MA(Ors)/92301/13 was listed for hearing and disposal and the same has been withdrawn by the applicant. Therefore, the order dated 14.02.2013 may be read as under:-

"Learned Consultant for the appellants seeks permission to withdraw the miscellaneous application listed today. Request is granted and applicant is allowed to withdraw the miscellaneous application. Accordingly, the application is dismissed as withdrawn."

4. In the above term we recall our dismissal order and the appeal is restored to its original number. The ROM application is disposed of."

Be that as it may, the appeal was heard by another Division Bench on the 16/07/2013 and when the following order was passed.

But, before that, the submissions made by the appellant -

+ The debit notes issued by M/s. HDFC Bank Ltd. are serially numbered which is indicated as reference number. It also indicates name and address of the service provider, the service tax registration number of the bank and the covering letter indicates the amount of service tax payable towards rentals and the period thereof and is duly signed by the authorized signatory of the service provider. In the annexure to the said debit notes, details of the service provided are indicated location-wise and the agreement which covers the service, the monthly licence fees charged and the service tax payable. Thus, all the particulars required under Rule 4A of the Service tax Rules, 1994 are reflected in the debit notes. Neither the Service Tax Rules, 1994 nor the CENVAT Credit Rules, 2004 envisage or prescribe that the invoice/bill/challan issued should contain all the information in one page only. It only prescribes the particulars which are required to be specified. So long as the particulars are specified in one page or in several pages, it does not make any difference. Therefore, the same is a valid document for taking CENVAT credit on the input services under Rule 9 of CENVAT Credit Rules, 2004.

+ As regards the contention of the Revenue that the appellant should have registered the individual premises from where services have been provided, in the present case, the appellant has their registered office at Chandivli, Mumbai from where centralised billing and centralised accounting are done. Therefore, as per the provisions of Rule 4(2), as it stood at the relevant time, the appellant registered their registered office at Chandivli, Mumbai from where centralized billing is done. Therefore, there is no need for registering individual premises from where the services are rendered as per the Rules, as it stood at the relevant time. In view of the above, the appellant's availment of credit on the input services received by them is in accordance with law.

+ Reliance is inter alia placed on the decisions in Imagination Technologies India P. Ltd. vs. Commissioner of Central Excise, Pune - III - (2011-TIOL-719-CESTAT-MUM) and Hybrid Electronic Systems P. Ltd. 1996(87)ELT 526 (Tri) &it is prayed that the appeal allowed.

The Revenue representative emphasized that ‘Debit Note' is not a ‘prescribed document' and therefore, availment on the strength of debit note is not in accordance with law. Support is derived from the decision in Godrej Consumer Products Ltd. - (2010-TIOL-1739-CESTAT-DEL). It is further submitted that each and every premise from where service is rendered is required to be registered for availing of credit and, therefore, he prays for upholding the impugned order.

The Bench observed -

++ The prescription of document is only a machinery provision for achieving the object of law. In the present case, Rule 4A of the Service Tax Rules, 1994 does not prescribe any format of document to be issued by the service-provider. It only specifies what are the particulars which should be contained in the document. In the instant case, there is no dispute that this information is not available. It is also not the contention of the Revenue that the appellant did not receive the ‘input service' and consumed the same in or in relation to the provision of ‘output service'. The only objection raised is that the information provided/contained in the document is not in one page but in several pages. Upongoing through the Service Tax Rules and CENVAT Credit Rules, we find that the law does not stipulate such a condition that the information should be available in one page and not in many pages. If the legislature wanted all the information in one page, they would have prescribed a format. That is not the position obtaining in the present case. The very fact the legislature chose not to prescribe a format itself indicate flexibility given to the service provider to issue suitable documents. Thus, the stipulation is only with respect to information required to be provided in the said document. So long as the information is available in the document, it is a valid document for availing credit.. Accordingly, the impugned demand on this ground is unsustainable in law.

++ As regards the contention that the appellant should have registered all the premises from where they rendered the services is bereft of any logic and reason. Such an interpretation would render Rule 4(2) of the Service Tax Rules, 1994 redundant. Rule 4(2), as it stood at the relevant time, provided for registration of the office of the service provider from where centralized billing is done or centralised account is maintained. The appellant has obtained centralized registration accordingly at the relevant time. All the invoices for the input services were received and also addressed to the registered office of the appellant. In view of the explicit provision in law for centralised registration, the denial of CENVAT credit on the ground that individual premises from where service is rendered were not registered, is clearly unsustainable.

Holding that the demands are not sustainable, the same were set aside and the appeal was allowed with consequential relief.

Cart before the horse etc. : On the website of HDFC bank, the following information is available with regard to the appellant -

Basel II - Pillar 3 Disclosures which mentions -

Details of subsidiaries and associates of the Bank along with the consolidation status for accounting and regulatory purposes are given below:

Atlas Documentary Facilitators Company Private Limited (ADFC) -

ADFC is an associate engaged in back-office processing and is accounted for by equity method in the Consolidated Financial Statements of the Group. It is not consolidated for capital adequacy purpose.

(See 2013-TIOL-1727-CESTAT-MUM)