2013 (4) TMI 493 - AT - Service Tax

Cenvat credit denied - assessee is in the business of providing management consultancy services - employees insurance - Held that - Cenvat credit availed in respect of employees insurance was upheld in decisions of India Gateway Terminal (P) Ltd. Vs. CCE, Cochin 2010 2010 (6) TMI 464 - CESTAT, BANGALORE , Stanzen Toyotetsu India Pvt. Ltd. Vs. CCE Bangalore 2008 (12) TMI 118 - CESTAT BANGLORE , CCE Raipur Vs. Raipur Rotocast Ltd. (2009 (7) TMI 568 - CESTAT, NEW DELHI) & Flamm Minda Automotive Ltd. Vs. CCE Delhi 2011 (1) TMI 246 - CESTAT, NEW DELHI . Cenvat credit on cab hire services - Held that - As decided in CCE, Bangalore-III Vs. Tata Auto Comp. Systems Ltd. (2009 (4) TMI 555 - KARNATAKA HIGH COURT) answering the substantial question framed in favour of the assessee, reiterated that transportation/rent-a-cab service provided by the employer to its employees in order to reach the factory premises in time has a direct bearing on the manufacturing activity and cannot be construed as a mere welfare measure nor availment of Cenvat credit denied on that assumption. Car parking facility has been held to constitute input service in relation to the business of mandap keeper service as decided in Desert Inn Limited Vs. CCE, Jaipur 2011 2011 (3) TMI 640 - CESTAT, NEW DELHI . Cenvat credit for service tax in respect of services including maintenance and repairs of the fly ash plant situated with the Thermal Power Plant located outside the factory premises decided in favour of assessee as relying on CCE, Nagpur Vs. Ultratech Cement Ltd. 2010 (7) TMI 302 - CESTAT, MUMBAI rejected Revenue s appeal and ruled in favour of the assessee with regard to the legitimacy of availment of. In favour of assessee.

Issues Involved:
1. Eligibility of Cenvat credit for management, maintenance, or repair services.
2. Eligibility of Cenvat credit for employee mediclaim insurance.
3. Eligibility of Cenvat credit for cab hire/rent-a-cab services.
4. Eligibility of Cenvat credit for car parking services.

Detailed Analysis:

1. Eligibility of Cenvat credit for management, maintenance, or repair services:
The appellant claimed Cenvat credit on management, maintenance, or repair services related to their business premises, which included common area maintenance charges. The adjudicating authority disallowed the credit, stating that these services were not used directly for providing output services and were not covered under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal, however, referenced the Karnataka High Court's decision in CCE, Bangalore-II Vs. Millipore India Pvt. Ltd., which held that services related to business activities, including maintenance, are eligible for Cenvat credit. The Tribunal concluded that these services are integrally associated with the appellant's business operations and thus eligible for Cenvat credit.

2. Eligibility of Cenvat credit for employee mediclaim insurance:
The appellant argued that employee mediclaim insurance is part of their operational policy, directly related to their business, and necessary to mitigate productivity loss. The adjudicating authority denied this, viewing it as a welfare measure not directly linked to output services. The Tribunal relied on precedents, including the Bombay High Court's decision in CCE Nagpur Vs. Ultratech Cement Ltd., which recognized that services used in relation to business activities are eligible for Cenvat credit. The Tribunal found that employee mediclaim insurance is integrally connected to the appellant's business and upheld its eligibility for Cenvat credit.

3. Eligibility of Cenvat credit for cab hire/rent-a-cab services:
The appellant contended that cab services for employee transportation are essential for efficient business operations and should qualify for Cenvat credit. The adjudicating authority disagreed, categorizing it as an employee welfare measure. The Tribunal referred to the Karnataka High Court's ruling in CCE, Bangalore-III Vs. Tata Auto Comp. Systems Ltd., which supported the view that transportation services for employees have a direct bearing on business operations and are eligible for Cenvat credit. The Tribunal thus found in favor of the appellant, allowing Cenvat credit for cab hire services.

4. Eligibility of Cenvat credit for car parking services:
The appellant claimed Cenvat credit for car parking services, arguing that it is necessary for employees who use personal vehicles. The adjudicating authority denied this, stating it was not directly used for providing output services. The Tribunal cited its own decision in Desert Inn Limited Vs. CCE, Jaipur, which recognized car parking facilities as input services in relation to business operations. The Tribunal concluded that car parking services are integrally connected to the appellant's business and eligible for Cenvat credit.

Conclusion:
The Tribunal found that the services in question-management, maintenance or repair, employee mediclaim insurance, cab hire, and car parking-are integrally connected to the appellant's business operations and qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The adjudication order disallowing Cenvat credit was thus quashed, and the appeal was allowed without costs.

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