2026-VIL-855-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Rebate on Export of Services - Eligibility of credit availed prior to service tax registration - Whether Cenvat Credit availed prior to obtaining service tax registration is admissible for the purpose of claiming rebate on export of services – HELD - A plain reading of the relevant provisions of the Finance Act and the Cenvat Credit Rules does not reveal any statutory condition making service tax registration a pre-condition for availment of Cenvat Credit. The obligation to register under the Finance Act is applicable only to persons liable to pay service tax, whereas the appellant, being exclusively engaged in export of services during the disputed period, was not liable to pay any service tax, and therefore was not required to obtain registration during that period. The credit availed on input services, though accumulated prior to registration, could lawfully be taken upon obtaining registration, subject to compliance with other applicable provisions of the Cenvat Credit Rules including nexus with output services and availability of proper documents - Multiple High Courts and co-ordinate benches have consistently held that there is no statutory provision disentitling a person from taking credit merely on account of non-registration during a period when registration itself was not required – The denial of credit solely on the ground of non-registration is not legally sustainable and set aside - The matter requires re-examination of the factual matrix including supporting documents by the original authority to verify eligibility of the credit under the provisions prevailing during the relevant period - Appeal allowed by way of remand - Cenvat Credit - Nexus between input services and output services - Eligibility of credit on certain input services such as life insurance for employees, rent-a-cab, hotel bills, air travel, medical check-up, annual maintenance contracts and vehicle maintenance - Whether credit on such input services can be denied on the ground that they lack a direct nexus with the provision of output services exported – HELD - The period in question falls prior to the amendment effected by the Finance Act of a later year, and that under the unamended definition of input service in the Cenvat Credit Rules, any service used in relation to business activities was eligible for credit, which carried a wider scope than what was introduced by the subsequent amendment. The Tribunal has consistently held that various categories of input services including those pertaining to management, maintenance or repair, air travel, outdoor catering, insurance for employees and entertainment expenses are eligible as input services in the context of provision of output services during this period, and that the original adjudicating authority failed to consider these binding decisions while denying credit on account of absence of nexus - Each denied input service requires fresh examination in the factual context of the appellant by applying the ratios laid down by the co-ordinate benches on the eligibility of such input services - Appeal allowed by way of remand
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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