2012 (9) TMI 237 - AT - Service Tax

Denial of input service credit on rent-a-cab service - Held that - The matter is remanded back to the adjudicating authority for verification whether rent-a-cab service availed by the appellant for the purpose of official use because as decided in CCE, Nagpur Versus Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT the appellants are entitled for input service credit on rent-a-cab service if the same is used by them for the official purpose and for bringing and dropping of their employees from their residence to the place of work as the said activity availed by them is in the course of business of manufacture - in favour of assessee by way of remand.

Summary

Issues:
- Denial of input service credit for rent-a-cab service under Rule 2(l) of CENVAT Credit Rules, 2004.

Analysis:

The judgment by the Appellate Tribunal CESTAT, CHENNAI addresses the issue of denial of input service credit for rent-a-cab service under Rule 2(l) of CENVAT Credit Rules, 2004. The appellants had appealed against an order where the credit was denied, contending that rent-a-cab service was not eligible as per the said rule. The Tribunal, acknowledging the narrow compass of the issue, waived the requirement of predeposit and proceeded with the appeal's disposal.

The appellant's counsel argued that the Show Cause Notice (SCN) alleged that rent-a-cab service did not qualify as an input service under Rule 2(l) of CCR 2004. However, both lower authorities noted the lack of documentary evidence from the appellant to substantiate the use of rent-a-cab service for official purposes, such as transporting employees from residence to work and other business-related activities. The counsel proposed that if the matter were remanded, they could provide the necessary documentation to prove the service's business use.

In light of the submissions, the Tribunal referred to a decision by the Hon'ble Bombay High Court in the case of CCE Nagpur Vs Ultratech Cement Ltd. The court's ruling stated that appellants are entitled to input service credit for rent-a-cab service if used for official purposes, including transporting employees in the course of business activities. The Tribunal emphasized the need for verification to confirm whether the rent-a-cab service was indeed utilized by the appellant for the specified purposes. Consequently, the matter was remanded to the adjudicating authority for this verification process. The stay application was also disposed of accordingly.

In conclusion, the judgment underscores the importance of providing documentary evidence to support claims for input service credit and highlights the necessity of demonstrating the business-related use of services in compliance with relevant rules and court precedents.