The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, has allowed assessee’s appeal against the denial of ₹58.99 lakh in CENVAT credit on business support services received from its group company, Aditya Birla Management Corporation Limited (ABMCL).

The bench of Ajay Sharma (Judicial  Member) and M.M. Parthiban (Technical Member) has observed that the dispute had already been settled in Hindalco’s favour for earlier periods. Following those decisions, the Tribunal set aside the appellate order sustaining the disallowance of credit, interest and penalty. 

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The appellant/assessee is in Nagpur manufactures aluminium products falling under Chapter 76 of the Central Excise Tariff. It availed CENVAT credit of duty paid on inputs and capital goods, as well as service tax paid on input services, for payment of central excise duty on its finished products.

ABMCL provided common corporate facilities and resources to companies within the group. These covered human resources, information technology, business strategy, marketing, legal support, accounting, knowledge and training.

The arrangement enabled group companies to access specialised functions and achieve economies of scale. At the end of each month, ABMCL apportioned the expenses incurred in providing these facilities among the group companies. The allocation ratio, decided by its board of directors, took into account factors including profit, revenue, net worth and net block.

ABMCL issued invoices for the allocated expenses and charged service tax under the category of “Business Support Services”. It discharged the tax liability and reflected the payments in its periodic returns. Hindalco claimed CENVAT credit of the service tax charged on the invoices issued to it.

The department disputed the credit on the ground that the assessee had not actually received services against the payments made to ABMCL. According to the department, the company was merely bearing a share of the costs incurred by ABMCL, even where no portion of the corresponding services had been received by it.

On this basis, the department contended that the service tax credit could not be treated as relating to services used in or in relation to the manufacture and clearance of Hindalco’s final products.

Periodic show cause notices had been issued on this issue from March 2007 onwards. The present proceedings arose from a notice dated May 4, 2018, proposing disallowance of ₹58,99,482 for April 2016 to June 2017, along with interest and penalty.

The Additional Commissioner confirmed the disallowance and imposed a penalty of ₹5,89,948. The Commissioner (Appeals), through an order dated February 28, 2019, upheld that decision by relying on appellate orders passed against Hindalco for earlier periods.

The assessee submitted that the earlier appellate orders relied upon by the Commissioner (Appeals) had subsequently been set aside.

The company referred to the Tribunal’s order dated January 22, 2026, which decided the same issue in its favour for March 2007 to June 2014. It also relied on the order dated July 2, 2026, granting relief for July 2014 to March 2016.

Hindalco further cited favourable decisions concerning other group companies, including Ultratech Cement Limited and Aditya Birla Science & Technology Co. Pvt. Ltd.

The department’s authorised representative reiterated the findings in the challenged order. However, the Tribunal recorded that both sides agreed that the issue had already been decided in Hindalco’s favour.

The Tribunal reproduced the reasoning from its earlier decision, which recognised that services cannot be physically traced in the same manner as goods. In that case, the payments made by Hindalco were undisputed, the invoices separately reflected the tax component, and there was no allegation that the service tax collected had not been deposited with the government.

The earlier ruling also relied on the principle that, where the service provider’s tax assessment remained undisturbed, authorities could not deny the recipient’s credit by adopting a different interpretation of the invoiced transaction.

The precedent discussed by the Tribunal recognised that operational and administrative assistance, infrastructure support and other corporate support functions could fall within Business Support Services.

It further explained that the method used to calculate the consideration did not change the nature of the service. Whether ABMCL recovered only its expenses or included a profit element, the allocated amount could represent consideration for the support services supplied to group companies.

The earlier findings also recognised the connection between these activities and Hindalco’s business, noting that the common functions enabled the company to benefit from specialisation in manufacturing and economies of scale.

The bench noted that the decisions relied upon by the assessee consistently held that CENVAT credit of service tax paid on the business support services could not be denied in these circumstances.

It also referred to its July 2, 2026 order, which had held that a different conclusion could not be adopted merely because the department issued a periodic notice covering another period on the same facts and issue.

Consequently, the Tribunal held that the present dispute was “no more res integra”, meaning that the legal issue had already been settled. It found no merit in the Commissioner (Appeals)’ order sustaining the credit disallowance.

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