CESTAT authorizes the Cenvat credit to the member of the association of industries who received services and incurred expenses


The Ahmedabad bench of the Customs, Excise and Services Tax Appeal Tribunal (CESTAT) composed of Ramesh Nair (judicial member) ruled that the member of an industry association who received the services and incurred the expenses is entitled to the cenvat credit.

The appellant/evaluated is a member of the Valia Industries association. Service provider Shree Rang Services provided the services and issued invoices to Valia Industries Association. The Valia Industries Association issued recoverable invoices to the appellant, and the appellant availed itself of the Cenvat credit on the invoices.

The department argued that the recipient of the service is M/s. Valia Industries Association, so credit cannot be given to the caller, who is not a recipient of services.

The Appellant argued that although the invoices were issued to Valia Industries Association, the service was received by the Appellant and the prorated cost of the service was borne by the Appellant alone. Accordingly, the appellant properly took advantage of Cenvat’s credit.

The appellant argued that the association Valia Industries was founded by its members only to benefit from common services for the benefit of the members in accordance with the act of association of 30.06.2008. The proportional share of the service charge as well as the service tax were paid by the members. Therefore, they are legally entitled to the Cenvat credit.

The appellant argued that the show cause notice was based on erroneous facts, as he alleged that the service was provided to Valia Industries Association. However, the service was only available to members of the association.

The CESTAT found that the appellant, according to the Association of Industries, namely the Association of Industries Valia, is only an association of which the appellant is a member. In accordance with the deed of association, the association was founded in the name of M/s. Valia Industries Association for the operation of water supply for the common benefit of all members. The association hired Shree Rang Services to manage the water supply project. Rang Services issued invoices for the management of the water supply in favor of the Valia Industries Association.

“I find that since it is undisputed that Shree Rang Services issued valid valid invoices in favor of M/s. Valia Industries Association and on the basis of a pro rata allocation of expenses, the Appellant made use credit,” CESTAT said.

The court held that the appellant had received the service and incurred the expenses, as well as the service tax, and was entitled to a Cenvat credit.

Case title: Gujarat Guardian Limited v CCE and ST-Vadodara-ii

Quote: Excise Appeal No. 12030 of 2018-SM

Date: 20.05.2022

Counsel for the Appellant: Lawyer SJ Vyas

Counsel for the Respondent: Superintendent (AR) RP Parekh

Click here to read/download the order

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