2013 (12) TMI 1275 - AT - Service Tax

Entitlement for cenvat credit - Scope of Input service under Rule 2(l) of the CENVAT Credit Rules 2004 Services used in relation to business activity or not Held that - Following CCE, Nagpur Vs. Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT -the question whether CENVAT credit on sponsorship service and renting of immovable property service was admissible to the respondent during the period of dispute requires to be addressed afresh by the Commissioner (Appeals) order set aside in so far the services is concerned and the said question regarding CENVAT ability of the two services (sponsorship service and renting of immovable property service) is directed to be reconsidered by the learned Commissioner (Appeals) Decided against Assessee.

Summary

Issues:
- Entitlement to CENVAT credit on specific services
- Interpretation of 'input service' under CENVAT Credit Rules 2004
- Precedential value of Tribunal's Final Order
- Consideration of integral connection to business for CENVAT credit

Entitlement to CENVAT Credit on Specific Services:
The Department appealed a decision by the Commissioner (Appeals) regarding the entitlement of the respondent to CENVAT credit on services including sponsorship service, renting of immovable property service, rent-a-cab service, and air travel agent's service. The original authority denied the credit, but the first appellate authority overturned this decision, stating that the services were used in relation to the business activities of the assessee, leading to the Department's appeals.

Interpretation of 'Input Service' under CENVAT Credit Rules 2004:
The appellant argued that for a service to qualify as an 'input service' under Rule 2(l) of the CENVAT Credit Rules, it must be integrally connected with the business activities of the assessee. Citing a case law, the appellant emphasized the importance of this integral connection in determining the eligibility for CENVAT credit.

Precedential Value of Tribunal's Final Order:
Regarding rent-a-cab service and air travel agent's service, the Tribunal held that a Final Order from a previous case involving the same assessee should be followed as a precedent. As the Department's appeals against this Final Order were not stayed, the Tribunal deemed the Final Order to be in effect, allowing CENVAT credit for these services.

Consideration of Integral Connection to Business for CENVAT Credit:
In the case of sponsorship service and renting of immovable property service, the Tribunal found merit in the appellant's argument. It noted that the Commissioner (Appeals) did not adequately consider the requirement of an integral connection to business for classifying a service as an input service. Quoting a High Court judgment, the Tribunal emphasized the need for services to be integrally connected with business activities for CENVAT credit eligibility. Therefore, the Tribunal set aside the Commissioner's decision on these services for reconsideration in light of the legal principles discussed.

In conclusion, the Tribunal affirmed the Commissioner's decision on rent-a-cab service and air travel agent's service, allowing CENVAT credit for these services. However, it directed a fresh consideration by the Commissioner (Appeals) regarding the eligibility of sponsorship service and renting of immovable property service for CENVAT credit, emphasizing the requirement of an integral connection to business activities for such eligibility.