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October 2013

2013 (31) STR 285 (Tri.-Ahmd) Comm. of ST vs. Krishna Communications

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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CENVAT credit – output servioces written off as bad debts – No reversal of CENVAT credit is required.

Facts:
The respondents providing advertising services were duly registered with the department and discharged service tax liability as and when the payments were received. The amounts already billed but subsequently found irrecoverable, were written off by it as bad debts.

The department demanded reversal of proportionate CENVAT credit taken on input services on account of such output service invoices being written off as bad debts which the Commissioner (Appeals) dropped holding that credit on input services was taken correctly and that the said input services were used for providing output services liable for payment of service tax.

The appellants contended that the value of bad debts constituted only 0.8% and that the eligibility of availment and utilisation the credit was not in question.

Held:
Observing that there cannot be one-to-one corelation for availing and utilising CENVAT credit of input services with provision of output service, the Hon. Tribunal held that the reasoning of the first appellate authority was correct and in consonance with the law and requires no interference and thus, rejected revenue’s appeal.

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