Standard Auto Agencies vs C.C.E. & S.T.-Bhopal

(Arising out of OIA No.BPL-EXCUS-000-APP-080-14-15 dated 21.07.2014 passed by Commissioner (Appeals) Customs, Central Excise and Service Tax, Bhopal)

Date of Hearing: 17/06/2015

Date of Pronouncement: 10/07/2015

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

Standard Auto Agencies Appellant

Vs.

C.C.E. & S.T.-Bhopal Respondent

Appearance:

Present for the Appellant: Shri Rakesh Khandelwal, CA

Present for the Respondent: Shri Ranjan Khanna, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No. 52150/2015

Per: Sulekha Beevi C.S.

The appeal is filed challenging the impugned order which disallowed the Cenvat Credit for capital goods and input services.

2. The appellants were originally engaged in the dealership of Yamaha Two Wheeler Vehicles. They have service tax registration since 2002 for their Yamaha showroom at Napier Town, (Near IV th Bridge) Jabalpur. Later they started Maruti four wheeler dealership in 2004. Appellants took separate premises on rent for Maruti Showroom and Workshop. But initially at the start up process, the administrative office of the Maruti dealership (sales showroom and workshop) was shown as the address of the appellant at Napier Town, (Near IV Bridge), Jabalpur itself. Later the Authorized Service Centre/Workshop located at Delite Talkies Road, Jabalpur was registered with service Tax Department on 27.11.2004. A month later they applied to the department to amend the service tax registration adding the premises of the Maruti Show Room also located at Bhawartal Extension, Napier Town, Jabalpur. The appellant provided output of servicing of vehicles at the workshop and also financing and insurance service (BAS) at the Maruti Showroom. They also availed Cenvat credit on capital goods and input services. The disputed period is from 1.10.2004 to 31.3.2005 and for the period from 1.4.2005 to 30.9.2005.

3. The appellants were issued a Show Cause Notice alleging that Cenvat credit on capital goods and input services was wrongly availed and utilized for the reason that the invoices issued were addressed to the appellants address at IV th Bridge, Napier Town, Jabalpur and also for the reason that during the relevant time the other premises of Maruti dealership business were not registered.

4. On behalf of the appellants it was submitted that at the time of commencement of business of Maruti Sale Show Room & Workshop, the address of appellant at IV th Bridge, Napier Town, Jabalpur i.e. the showroom of Yamaha was used initially as the administrative Office of Maruti dealership during the start up process.. The business of the Maruti show room commenced only on 14.11.2004 when the first car was sold and the business of the workshop commenced on 14.11.2004 when the first bill of servicing was raised. That all the capital goods supplied and input services provided were utilized in the Maruti Sales Show Room & Workshop only, though these premises were registered later. It is also submitted that during the half year ended March 2005 and September 2005, the appellant had filed return showing the address of Maruti Showroom and Workshop. That the invoices of capital goods and input services which have been disallowed came to contain the address of the appellants at IV th Bridge, Napier Town Jabalpur only because at the initial stage of setting up of the business of Maruti dealership, the Office at IV th Bridge, Napier Town, Jabalpur was being used as administrative office of the appellants Maruti dealership business.

5. In the impugned order, The Commissioner (Appeals) has stated that the above contentions of the appellant are not acceptable because as per Rule 4 of the Service Tax Rules, 1994, the appellant is required to obtain separate registration for all premises where the services were either received or provided by them or they should have obtained centralized registration. I cannot agree with this view of the Commissioner (Appeals). It is evident from records that the Maruti dealership business commenced during the relevant period. On a pragmatic approach, it has to be considered that the appellant needs time to set up business/business premises. Only then can the appellant apply for service tax registration. The appellant cannot be found fault with or denied the benefit otherwise available to the appellant, for the reason that, in the process of setting up of business the appellant used the available office address. The Department does not have a case that the capital goods were not utilized in the appellants Workshop. In fact a certificate has been issued by the supplier of the goods that they were supplied to the workshop and the billing was done at the appellants, IV Bridge, Napier Town, Jabalpur address because the appellant was in the process of setting up the Workshop. In the case of input services also, the Department does not have a case that these were not provided or utilized by the appellants Maruti Showroom & Workshop. It is categorically stated by the appellant that the appellant keeps separate accounts for all these business. Further, the Department has no case that these invoices were bogus or sham documents. The lease agreements for the premises of Workshop & Maruti Show room was taken in July/2004 and October 2004. Only because the invoices were issued to the temporary administration office used by the appellant during the process of setting up of business, it cannot be said that the appellant did not establish that the capital goods and input services were not used in the Maruti Sales Showroom & Workshop.

6. The Rules which lay down the details that has to be stated in the invoice are to ensure that the benefit of Cenvat Credit is not misused. In the facts and circumstances of this case, only because at the time of issuing the invoices by the suppliers/provider the Maruti Show room & Workshop were not registered and invoices were addressed to the appellants temporary administration office, the appellants cannot be denied the benefit of the Credit. The appellants have got their premises registered with service tax and the dispute was only during the limited time when the appellant was in the process of setting up the business.

7. From the foregoing, I am of the view that the appellants are entitled to the benefit of Cenvat Credit of Rs.34,535/-. The impugned order is set aside with consequential relief to the appellants.

(Pronounced on 10/07/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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