CENVAT Credit Cannot Be Denied Solely Because Running Account Bills Are Not Invoices: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that CENVAT credit cannot be denied merely because running account bills are not conventional invoices, provided they contain the prescribed particulars required under law.

Observing that, "The crux of the matter is that the authority needs to be satisfied about the relevant details/particular and not the form of the document," the tribunal ruled in favour of the Rajasthan Housing Board.

Judicial Member Binu Tamta and Technical Member P.V. Subba Rao allowed the Rajasthan Housing Board's appeals after finding that the requirements under the Cenvat Credit Rules, 2004 and the Service Tax Rules, 1994 had been fulfilled.

The dispute arose after the tax department questioned the board's availment of more than ₹1.11 crore in CENVAT credit on running account bills relating to construction works. According to the department, the bills were not prescribed documents under Rule 9 of the Cenvat Credit Rules and lacked the mandatory particulars required for claiming credit.

The Housing Board argued that the running account bills were prepared by contractors and verified by its engineers. It also submitted that wherever service tax was payable under the reverse charge mechanism, it had discharged the tax and claimed credit on the basis of contractors' bills and service tax payment challans containing the prescribed particulars.

Examining Rule 4A of the Service Tax Rules and Rule 9 of the Cenvat Credit Rules, the tribunal said the emphasis is on whether the prescribed particulars are available rather than the title or format of the document.

Referring to its earlier decision in Resident Engineer, Rajasthan Housing Board, it reiterated that documents containing the substantive particulars required under the Rules should be treated on par with invoices.

Applying that principle, the tribunal found that the board had paid service tax under the reverse charge mechanism wherever applicable and held, "The credit has been taken on such service tax and service tax payment challan is a proper document to claim the credit under RCM... Thus, the requirement as per Rule 4A of STR, 1994 read with Rule 9 of CCR, 2004 has been fulfilled and hence, the appellant cannot be denied the benefit of cenvat credit."

Holding that the statutory conditions for availing CENVAT credit had been satisfied, the tribunal set aside the impugned orders and allowed both appeals.

For Appellant: M.B. Maheshwari, Chartered Accountant

For Revenue: S.K. Meena, Authorized Representative