CENVAT credit cannot be denied on service tax paid for group-company business support services.

Hindalco claimed CENVAT credit of service tax charged by its group company, Aditya Birla Management Corporation Limited (ABMCL), on business support services (BSS). ABMCL allocated expenses for shared corporate functions—including human resources, IT, legal, accounting and marketing support—to group companies, issued invoices and paid service tax on the amounts charged.

The Department alleged that Hindalco had not received services from ABMCL and disallowed credit of ₹58,99,482 for April 2016 to June 2017, with interest and penalty; the Commissioner (Appeals) upheld the disallowance.

Hindalco appealed, relying on earlier Tribunal decisions in its own cases concerning the same issue.

1. Whether Hindalco was eligible to claim CENVAT credit of service tax paid on BSS invoiced by ABMCL for April 2016 to June 2017.

2. Whether the disallowance of that credit, as upheld by the Commissioner (Appeals), was legally sustainable.

Rule 14 of the CENVAT Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944, governed recovery of credit alleged to have been wrongly taken; Rule 15(1) of the Credit Rules, read with Section 11AC of the Act, concerned penalty.

The Tribunal applied its earlier decisions in Hindalco’s own cases, which held that ABMCL’s shared corporate support activities qualified as BSS, that allocation of expenses could constitute the value of those services, and that credit could not be denied on the asserted absence or ineligibility of services while the tax charged on them had been accepted and paid.

It also referred to Modular Auto Ltd. and an earlier Tribunal decision in Hindalco Industries Limited in support of those principles.

The Tribunal found that the dispute involved the same issue and materially identical facts as Hindalco’s earlier appeals, in which credit on service tax paid for BSS supplied by ABMCL had been allowed.

Following those decisions, the Tribunal found no basis to take a different view for the period in question and held that the Commissioner (Appeals) had erred in upholding the disallowance.

It set aside the Commissioner (Appeals)’ order and allowed Hindalco’s appeal.