Wiptech Peripherals Pvt. Ltd. v. Commissioner Of C. Ex., Rajkot

[Order]. - The input credit of service tax of Rs. 39,330/- stand denied to the appellant on the ground that the service tax paid on cell-phone, land-line, courier service cannot be held to be input service for the output service i.e. “maintenance and repairs” being provided by the appellant.

2. The appellant’s contention is that they were providing said services as franchisee of TATA, WIPRO, MSN Network and as a part of the agreement with the said company, the appellant had to provide the services immediately within 24 hours of call from their customers. In order to provide efficient services, the appellant-company provided cell-phones to all engineers attending calls/field work and the appellant availed and used the said Cenvat credit charged in bill for the said phones.

3. I find that the law on the issue is no more res integra and stand settled by various decisions of Tribunal that the service tax paid on cell phones or land-lines used in connection with output services is available as credit. However, I find that Commissioner (Appeals) has observed that some of the cell phones were in the name of individuals and the appellant has not been able to establish that they were exclusively used in relation to the output services.

4. In view of the factual dispute, I send the matter to the original adjudicating authority for verifying the above aspect and if the phones are being used for attending calls of the customers to allow the credit by treating same as input service. In any case, I find no justification for imposition of penalty upon the appellant inasmuch as the dispute relates to the interpretation of the provisions of law. Accordingly, I set aside the penalty.

5. Appeal is disposed off in above terms.

(Dictated and pronounced in Court on 27-6-2008)