CESTAT Delhi Allows CENVAT Credit on Sub-Contractor and Imported Input Services

Alcatel Lucent India Ltd. Vs Commissioner of Service Tax (CESTAT Delhi)

The appeal was filed against the order dated 31.07.2014 passed by the Commissioner (Adjudication-I), which denied the appellant CENVAT credit on (i) service tax paid on services received from sub-contractors, and (ii) service tax paid on import of services under the reverse charge mechanism for the period prior to 18.04.2006. The remaining demands raised through four show cause notices covering the period 2004-05 to 2011-12 had been dropped.

The Tribunal identified two issues for determination: whether services provided by sub-contractors qualified as input services entitling the appellant to CENVAT credit, and whether CENVAT credit was admissible on service tax paid under the reverse charge mechanism for imported services before 18.04.2006.

On the first issue, the appellant relied upon an order dated 08.01.2018 passed by the Commissioner, Rohtak, and the Tribunal’s order dated 24.08.2018 in the appellant’s own case for later periods, both of which held that services provided by sub-contractors constituted input services eligible for CENVAT credit. The Department supported the Commissioner’s findings, which relied upon the Master Circular dated 23.08.2007, but had distinguished it on the ground that the entire work, rather than part of the work, had been assigned to the sub-contractor.