2010 (7) TMI 736 - AT - Service Tax

Whether catering service can be considered as an input service for manufacture of finished goods - Held that - service tax credit in respect of catering service is not admissible in respect of manufactured goods order set aside by confirming the demand of service tax and interest while setting aside the penalty imposed. The department s appeal is partly allowed.

Summary

Issues:
Eligibility of input service tax credit on catering service for the manufacture of alternator and starter motor.

Analysis:
The issue in this case revolves around the eligibility of input service tax credit on catering service used in the manufacturing process of alternator and starter motor. The respondent argued that they are entitled to such credit based on a Larger Bench decision of the Tribunal in a previous case. On the other hand, the Department contended that a different Tribunal decision and a Supreme Court ruling favored their position.

Upon hearing arguments from both sides, the judge found that the issue of considering catering service as an input service for manufacturing finished goods had been extensively discussed in a previous Tribunal order. This order had considered the Larger Bench decision and a Supreme Court ruling, ultimately concluding that service tax credit for catering service is not admissible for manufactured goods. The judge, following the Supreme Court's decision, upheld the demand for service tax and interest, while setting aside the penalty imposed. Consequently, the Department's appeal was partly allowed.