2011 (3) TMI 495 - AT - Service Tax

Cenvat credit - out-door catering services - in the case of M/s. GTC Industries Limited v. CCE, Mumbai - (2008 -TMI - 31592 - CESTAT MUMBAI), has extended the benefit of credit of service tax paid on outdoor catering services Regarding credit on service tax paid on services of practicing Chartered Accountant - since they are giving quantity discount based on the sales made by the distributors to their customers, in order to verify the authenticity of the claims made by the distributors, they are required to get the balance stock remaining with the distributors verified by a practicing Chartered Accountant - It is not for the Revenue to decide as to whether a particular job could have been done by the assessee s own employee or by the Chartered Accountant - Decided in favor of the assessee Regarding credit on security services - The said services were used for the security of godown storing sugar outside the factory premises as well as for the security of their sales office at Noida and the security of their General Manager s residence - held that appellants would be entitled to the credit of the service tax paid on the security service availed at the Godown for storing sugar - Decided in favor of the assessee

Summary

Issues:
1. Availment of modvat credit of service tax paid on outdoor catering services.
2. Eligibility of modvat credit on services of practicing Chartered Accountant.
3. Eligibility of modvat credit on security services.

Analysis:
1. The first issue pertains to the availment of modvat credit of service tax paid on outdoor catering services. The Tribunal noted that the Commissioner (Appeals) had relied on a Larger Bench decision in a specific case to extend the benefit of credit for service tax paid on outdoor catering services. The Revenue raised various grounds and cited Tribunal decisions to argue against the credit. However, the Tribunal held that the specific Larger Bench decision covered the disputed issue favoring the assessee. Despite the Revenue's appeal to the High Court, as the judgment was not stayed, it was required to be followed. Consequently, the appeals filed by the Revenue were rejected.

2. The second issue concerns the eligibility of modvat credit on services provided by a practicing Chartered Accountant. The Commissioner (Appeals) had denied the credit, stating that such services could have been performed by any employee of the appellant and were not exclusively eligible for credit. However, the Tribunal disagreed, emphasizing that it was not the Revenue's prerogative to decide who could perform the job. Since the appellant chose to engage a Chartered Accountant and paid the service tax, they were entitled to the credit. Therefore, the Tribunal held that the appellants were eligible for the credit of service tax paid on the services of the Chartered Accountant.

3. The final issue revolves around the eligibility of modvat credit on security services. The Commissioner (Appeals) rejected the credit for security services provided outside the factory premises, except for the security of the main raw material stored in a godown. The Tribunal concurred that security for the raw material could be considered an activity related to the business. However, security services for the sales office and the General Manager's residence were deemed unrelated to business activities and thus ineligible for credit. Consequently, the Tribunal upheld the credit for security services at the godown but rejected the claim for security services at other locations.

In conclusion, all three appeals were disposed of based on the above analyses.