By TIOL News Service

CHENNAI, FEB 03, 2016: APPELLANT availed CENVAT Credit on certain services which were availed at different places for the purpose of manufacture and head office of the appellant incurred expenses thereof including discharge of service tax thereon. Department denied the same on the ground that the head office of the appellant is not registered as Input Service Distributor (ISD).

It is the contention of the appellant that ISD registration is only a procedural requirement of law. There is no doubt to the department on the services availed by appellant company as well as service tax paid on such services. Therefore, denial of CENVAT credit shall be detrimental to the interest of justice.

After hearing both sides, the Tribunal held:

+ So far as claim of CENVAT credit prior to 1.4.2008 is concerned, law has permitted grant of CENVAT credit in respect of service tax paid to avail GTA services. There shall be no dispute on this count. However, whether status of ISD registration is sine qua non is the question. When the credit claimed on the services availed was not disputed nor even service tax paid is in dispute, so also the genuinity of the parties is not disbelieved, denial of CENVAT credit of the service tax suffered by the head office of the appellant shall be detrimental to the interest of justice. There is also no finding that service tax paid by the head office were not connected to the business of the appellant or were irrelevant.

+ Registration is a regulatory measure to bring the assessee to the fold of the law. Even if unregistered, the liability under law remains unchanged. Therefore, denial of the distribution of CENVAT credit during unregistered period shall be anomaly to law when tax liability incurred is ordered to be paid. Accordingly, in so far as distribution of service tax credit prior to 1.4.2008 is concerned, the appellant is entitled to the CENVAT credit thereof.

(See 2016-TIOL-318-CESTAT-MAD)