2011 (8) TMI 542 - AT - Service Tax

Cenvat credit - credit denied on the ground that courier service is not an input service - Inputs service definition provides that credit is available in respect of input services for activities relating to business - In view of the wide definition of input service in the inclusive part of definition and also in view of the decisions cited by the learned consultant which are squarely applicable to the facts of this case and which have been rendered in respect of courier service only, appellant is eligible for the cenvat credit. - It is also to be taken note of that courier service is being used by the appellant for sending documents, cheques and demand drafts etc. and not for despatch of final products.

Summary

Issues:
Cenvat credit denial on courier services as input service.

Analysis:
The issue in this case revolves around the denial of Cenvat credit on service tax taken on Courier Services, with a penalty imposed on the grounds that courier service is not considered an input service. The appellant argued that courier services were utilized for various business activities such as document delivery, payments, and inquiries, not for the dispatch of finished materials. The appellant relied on previous tribunal decisions to support their claim.

The learned consultant representing the appellant highlighted that the definition of input service includes services used in relation to business activities, not solely limited to manufacturing and clearance of final products up to the place of removal. It was argued that the lower authorities had incorrectly interpreted the definition by focusing only on the manufacturing aspect and not considering the broader scope of the inclusive part of the definition. The tribunal acknowledged the wide definition of input service, emphasizing that credit is available for services related to business activities.

The tribunal considered the decisions cited by the appellant as directly applicable to the case at hand, particularly in relation to courier services. It was noted that the appellant used courier services for sending documents, cheques, and demand drafts, rather than for dispatching final products. Consequently, the tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief.

In conclusion, the tribunal's judgment emphasized the inclusive nature of the definition of input service, extending beyond manufacturing activities to encompass services related to business operations. By considering the specific use of courier services by the appellant and previous tribunal decisions, the tribunal found the appellant eligible for Cenvat credit on courier services, ultimately allowing the appeal and providing relief to the appellant.