2012 (8) TMI 602 - AT - Central Excise

Non eligibility of cenvat credit - rent a cab services - Held that - As decided in Stanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT Rent-a-Cab service is provided by the assessee to these workers to reach the factory premises in time which has a direct bearing on the manufacturing activity & by no stretch of imagination can it be construed as a welfare measure. It is a basic necessity so as to ensure that the work force comes on time at the work place the employers have taken this measure which has a direct bearing on the manufacturing activity. As undisputed fact of the case that the services of rent a cab services were received by the respondent for transportation of their employees from their residence to the factory premises and back to the residence and the service provider is registered and respondent is discharging the service tax liability billed on on such services rendered - no ground to deny the claim - in favour of assessee.

Summary

Issues:
Eligibility of cenvat credit for service tax paid on rent a cab services.

Analysis:
The appeal was filed by the Revenue against an order in appeal regarding the availing of cenvat credit of service tax paid by rent a cab services for transporting employees. The Revenue authorities contended that such services were not eligible for cenvat credit. The first appellate authority, relying on previous decisions, allowed the cenvat credit. The departmental representative argued that there was no proven nexus between the services and their eligibility for cenvat credit, suggesting that the services were merely welfare services. The appellant cited a Tribunal decision and a Supreme Court decision to support their argument.

The respondent's counsel, on the other hand, referenced a Tribunal decision that was upheld by the High Court of Karnataka, emphasizing the direct relevance of the decision to the eligibility of cenvat credit for service tax paid by rent a cab services. The Tribunal analyzed the submissions from both sides and acknowledged that the issue at hand was solely about the respondent's eligibility for cenvat credit for service tax paid by rent a cab services.

It was established that the respondent had received rent a cab services for transporting employees between their residence and the factory premises, with the service provider being registered and the service tax liability being discharged by the respondent. The Tribunal referred to previous judgments, including the case of Stanzen Toyotetsu India (P) Ltd., which held that the receiver of such services was entitled to avail cenvat credit for the service tax paid. The Tribunal also highlighted the decision of the High Court of Karnataka upholding the aforementioned judgment.

Regarding a decision cited by the departmental representative, the Tribunal noted that it was from a Single Member Bench and was subsequently followed by the Tribunal in another case, ultimately leading to the dismissal of the appeal by the High Court of Karnataka. The Tribunal concluded that the first appellate authority correctly followed the established law in allowing the cenvat credit for service tax paid on rent a cab services to the respondent. The impugned order was deemed correct, legal, and without any infirmity, leading to the rejection of the appeal.