Introduction 1. Clean circulation of credit score chain may be very needed to minimize the burden of any oblique tax on the final word shopper. Adopting the system of enter tax credit score underneath Gross sales tax Acts, CENVAT Credit score system was launched with impact from September 10, 2004 underneath Excise and Service Tax which was initially administered by the CENVAT Credit score Guidelines, 2002 and was later adopted by the CENVAT Credit score Guidelines, 2004. The Idea of ‘Enter Service Distributor’ (ISD) within the Cenvat Credit score Guidelines, 2004 (CCR) was launched with a necessity to offer for a mechanism to facilitate the switch of Cenvat credit score when there’s an involvement of a number of manufacturing unit/premises of producer/service supplier. In case of single premise/unit, total credit score belongs to that single premise/unit and thus no must distribute the credit score. The Central Board of Excise and Customs, in para 10.three of the “Taxation of Service – An Education Guide” said that “the facility of registering as an input service distributor exists to allow businesses to operate at their convenience and allow centralized procurement of services while distribution of credit to units where such services are used.” Which means of Enter Service Distributor 2. As per Rule 2(m) of the CENVAT Credit score Guidelines, 2004: “Input Service Distributor” means an workplace of the producer or producer of ultimate merchandise or supplier of output service, which receives invoices issued underneath rule 4A of the Service Tax Guidelines, 1994 in direction of purchases of enter providers and points bill, invoice or, because the case could also be, challan for the needs of distributing the credit score of service tax paid on the stated providers to such producer or producer or supplier or an Outsourced manufacturing unit because the case could also be.” 2.1. Subtle perusal of the definition suggest that credit is to be distributed by the Office of the manufacturer or provider of output service. The emphasis is required to be given on the word “Workplace” which can be any office and need not be only head Office. As provided inM/S India Cements Ltd.- 2015-Tribunal,Cenvat can be distributed by the “Head Workplace” as well as by “Regional workplace”. Similarly in case of CCEx., Guntur v. Varun Motors [Final Order Nos. 573-574/2012, dated 10-8-2012], a sales office was acknowledged to be an office of a service provider and held to be eligiblefor registration as an premises of an input service distributor. 2.2. The work of ISD could be compared with the First stage dealer (FSD) and Second stage dealer (SSD) who get registered for the purpose of distributing the credit and not to discharge of any duty/tax liability. But the difference lies in the point that ISD need to be an office of manufacturer or Service Provider while there is no such requirement in case of FSD or SSD. It has been observed in Commissioner of Service Tax, Ahmedabad v. Godfrey Philips India Ltd. [2009 (239) E.L.T. 323 (Tri. – Ahmd.) that “The definition of the enter service distributor clearly says that he’s not merely a seller. The enter service distributor needs to be an workplace of the producer or producer of ultimate merchandise or supplier of output service. The seller buys the manufactured items on which duties have been paid and passes on the precise obligation paid by problem of an bill. He doesn’t take any duty as regards eligibility of Cenvat credit score by his consumers. Whereas an enter service distributor independently receives bill and actually he could possibly be in comparison with a purchaser of products or service from the producer or an output service supplier.”
