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2010 (12) TMI 379 - AT - Service TaxRefund - Rule 2(l) of the CENVAT Credit Rules, 2004 - Business Auxiliary Services - Hon ble High Court of Bombay in the case of Ultratech Cement (2010 -TMI - 78203 - BOMBAY HIGH COURT) - Held that the assessee is not entitled for input service credit for the charges recovered by them against the subsidised food from their employees - Therefore, the appeal of the Revenue is partly allowed by way of remand to the original adjudicating authority to quantify the amount recovered by the assessee from their employees for providing subsidised food after giving reasonable opportunity of hearing to the assessee to produce the documents for quantification - In the facts and circumstances of these cases and as no penalty is warranted as the issue involved is interpretation of statute - Appeals are disposed of
Issues:
1. Rejection of refund claim for input services related to local travel, medical insurance, outdoor catering, and meal coupons. 2. Eligibility of input service credit under Rule 5 of CENVAT Credit Rules, 2004. 3. Dispute over input service credit availed by the assessee prior to May 2006. 4. Denial of input service credit on local travel, medical insurance, meal coupons, and outdoor catering services. Analysis: Issue 1: Rejection of Refund Claim for Input Services The controversy in the case arose due to the rejection of the refund claim of the assessee for input services like local travel, medical insurance, outdoor catering, and meal coupons. The Revenue disputed the allowances of the refund claim for outdoor catering and meal coupons, leading to a legal dispute. Issue 2: Eligibility of Input Service Credit The assessee filed a refund claim under Rule 5 of the CENVAT Credit Rules, 2004, for input services availed in the course of their business. The learned Advocate for the assessee argued that the services denied were essential for their business and relied on legal precedents to support their claim for input service credit. The Revenue, on the other hand, contended that certain services were not eligible for credit, citing specific legal judgments. Issue 3: Dispute Over Input Service Credit Prior to May 2006 The Revenue argued that services exported by the assessee became taxable only from May 2006, and any input service credit availed before this date was not eligible. The lower appellate authority held that since no export of service took place in April 2006, the assessee was not entitled to claim credit for input services availed during that period. However, the Tribunal disagreed, stating that credit could be availed at the time of service availed, not at the time of providing services. Issue 4: Denial of Input Service Credit The Tribunal examined the denial of input service credit on local travel, medical insurance, meal coupons, and outdoor catering services. It was found that the denial of credit on local travel and medical insurance was unsustainable as these services were availed in the course of business. The Tribunal allowed the appeals of the assessee concerning these services. Regarding meal coupons and outdoor catering, the Tribunal partially allowed the Revenue's appeal, remanding the matter for quantification of the amount recovered by the assessee for providing subsidised food. In conclusion, the Tribunal allowed the appeals of the assessee related to input service credit on certain services while partially allowing the Revenue's appeal on meal coupons and outdoor catering. No penalty was imposed as the issue primarily involved the interpretation of the statute.
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