The CESTAT, Mumbai in the case of M/s. Tata AIG General Insurance Co. Ltd. v. Commissioner of Service Tax, Mumbai [Service Tax Appeal No. 85359 of 2017 and 85635 of 2021 dated November 08, 2023] allowed the appeal and held that Credit cannot be denied due to incorrect description of Service on invoices when the recipient who had paid the required Service Tax through the service receiver to avail the input services.
Facts:
M/s. Tata AIG General Insurance Co. Ltd. (“the Appellant”) engaged in the business of providing general insurance services. The Appellant availed CENVAT Credit (“the Credit”) against payment of tax paid towards the support services and infrastructure facilities received from the various motor car dealers (“the Dealers”).
After the investigation conducted by the Revenue Department (“the Respondent”) it was alleged that such services were not provided by the Dealers to the Appellant. The Show Cause cum Demand Notice dated October 15, 2015 was under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1944 for denying the Credit against the service availed for period of April 2010 to March 2015. The demand was confirmed vide Order-in-Original dated November 28, 2016 (“the Impugned Order”).
Also, for the subsequent period of April 2015 and July 2017 the statement of demand dated January 18, 2018 under Section 73(1A) was issued for recovery of inadmissible credit. Thereafter, the said demand was confirmed vide Order-in Original dated January 30, 2021 (“the Impugned Order”) along with interest and penalty.
Aggrieved by the OIO passed, the Appellant appeal before this Appellate Tribunal contending that raising invoices with incorrect descriptions by the service provider i.e. the Dealer would not make the transaction invalid, therefore, Credit should not be denied to the recipient of service i.e. the Appellant.
Issue:
Whether the Credit can be denied due to incorrect description of Service on invoices when Service Tax has been correctly paid?
Held:
The CESTAT, Mumbai in Service Tax Appeal No. 85359 of 2017 and 85635 of 2021 dated November 08, 2023 held as under:
- Opined that, the Credit cannot be denied to the recipient who had paid the required Service Tax through the service receiver in order to avail the input services.
- Held that, the appeals are allowed and the Impugned Order are set-aside.
Conclusion:
The CESTAT Mumbai’s ruling in the Tata AIG case sets a precedent by emphasizing that the denial of credit based on incorrect service descriptions is not justified when the requisite service tax has been correctly paid. This decision provides clarity and protection to businesses facing challenges related to discrepancies in service descriptions on invoices. It reinforces the principle that compliance with tax payment obligations should be the primary consideration in determining credit eligibility.
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