Iffco Tokio Insurance Services Ltd Vs Commissioner of ST (CESTAT Chandigarh)
The appeals before CESTAT Chandigarh challenged orders dated 28.02.2017 and 31.12.2018 whereby the Commissioner (Appeals) upheld demands of service tax along with penalties by denying CENVAT credit availed by the appellant. The appellant was engaged in providing taxable insurance auxiliary services and carried out all operational activities from its Gurugram office, where centralized billing and accounting were maintained. Its offices at different locations functioned as extensions of the operational office and undertook back-office activities. During the relevant periods, the appellant discharged its service tax liability by utilizing CENVAT credit on input services for which vendors had issued invoices to the local offices.
The Revenue denied the credit on the ground that the appellant had availed and utilized CENVAT credit on the strength of invoices addressed to local offices rather than its registered premises, alleging violation of Rule 4A(1) of the Service Tax Rules, 1994 read with Rule 9(2) of the CENVAT Credit Rules, 2004. Separate show cause notices were issued for different periods, the adjudicating authority confirmed the demands, and the Commissioner (Appeals) rejected the appellant’s appeals.
The appellant submitted that the issue had already been settled through several judicial decisions holding that CENVAT credit could not be denied merely because invoices for input services were issued to unregistered branch offices. It also contended that the Commissioner (Appeals) had merely reiterated the findings of the adjudicating authority without addressing its submissions. The appellant relied upon decisions of the Tribunal and various High Courts, including the Karnataka High Court, to contend that denial of credit on this ground amounted to denial of a substantive benefit on account of a procedural irregularity. The appellant further relied upon the Tribunal’s decision in Spice Digital Ltd., which, after considering decisions of the Karnataka and Rajasthan High Courts, held that CENVAT credit could not be denied on procedural irregularities.
