CENVAT Credit when the car is in name of partner of firm should not be denied
Credit of insurance/repair of motorcar is available to assessee-firm even if car is in name of partner, provided car is shown as assets in books of firm and depreciation and other expenditure thereon is incurred/borne by firm
CESTAT, MUMBAI BENCH
Rathi Daga
v.
Commissioner of Central Excise, Nashik
FINAL ORDER NO. A/119/2015-WZB/SMB
APPEAL NO. ST/3/2012-MUM
JANUARY 14, 2015
Rule 2(l), read with rules 3 and 9, of the Cenvat Credit Rules, 2004 – Cenvat Credit – Input service – General – Assessee took input service credit of insurance and maintenance services of motor car – Department denied credit on ground that motor car was not in name of ‘firm’ but one of partners – HELD : It was found that : (a) motor car was considered as an asset in books of account of firm; (b) depreciation thereon was claimed in firm’s books proving that it was used for business of partnership firm; (c) insurance/repairs and maintenance bills, which were issued in name of partner, were also taken into books of account, treating it as expenditure to firm – Hence, credit in question was eligible as expenditure was incurred by firm [Para 7] [In favour of assessee]
Input service credit :
| ■ | It was found that the motor car is considered as an asset in the books of account for the years 2008-09 and 2009-10. Ledger showing depreciation also corroborates the fact of asset which is used for business of partnership firm. Similarly, the insurance, repairs and maintenance bills in respect of the motor vehicles issued in the name of partner are also taken into books of account, treating it as expenditure to the firm. | |
| ■ | The adjudicating authority opined that : ‘Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm, the mere fact that the motor vehicles are registered in the name of partner and not in the name of firm, the credit cannot be denied, as the expenditure has been incurred from the firm’s budget’. | |
| ■ | On the one hand adjudicating authority says that the expenditure has been incurred from the firm’s budget whereas on the other hand he comes to a conclusion that no documentary evidence showing use of vehicles for output services, has been produced. | |
| ■ | In any case it was never the allegation in the show-cause notice that the vehicles are not used for providing output services. | |
| ■ | The allegation in the show cause notice is vague as is stated that the insurance & maintenance of motor vehicle on which the Service Tax credit is availed appears to be not input services and therefore credit of the same is inadmissible as per provision of Cenvat Credit Rules, 2004. The allegation in the show-cause notice is neither definitive nor substantiated in any manner. | |
| ■ | Hence, credit was allowed. [Para 7] |