CESTAT Allows CENVAT Credit on Select Input Services, Restricts Demand to Normal Period, Sets Aside Penalty

Citibank N.A. Vs Commissioner of GST & Central Excise (CESTAT Chennai)

The appeals were filed by Citibank N.A. against an Order-in-Original dated 09.09.2016 confirming service tax demands relating to alleged wrongful availment of CENVAT credit on various input services during the period 2009-10 to September 2015. The original proceedings involved multiple show cause notices covering services such as cleaning, club or association, convention, event management, general insurance, health and fitness, insurance auxiliary, mandap keeper, outdoor catering, rent-a-cab and tour operator services. After partial appropriation of the confirmed demands, the balance demand under challenge amounted to ₹1,05,80,154.

The appellant contended that it was engaged exclusively in providing taxable output services and that the disputed services had a clear nexus with its business operations. It argued that the definition of “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004, particularly before 01.04.2011, was broad enough to cover such services. The appellant further submitted that the post-01.04.2011 amendments only introduced specific exclusions and did not generally eliminate business-related services from eligibility. It also argued that no interest or penalty was payable because the disputed credit had not been utilized and the available CENVAT credit balance always exceeded the disputed amount.

The Revenue supported the impugned order, submitting that the eligibility of each disputed service had been examined in detail and that the extended period of limitation had been correctly invoked in the self-assessment regime due to the appellant’s failure to correctly assess and disclose its liabilities.