2014 (4) TMI 873 - AT - Central Excise

Waiver of pre-deposit - Availment of CENVAT Credit - Held that - as regards the service tax paid on canteen service, housekeeping service and repairing of motor vehicles, prima facie credit seems to be available to the appellant as these are required for the purpose of conducting the business activity. There are various case laws which have decided as to these services are eligible as input services - appellant needs to be put to some condition at least in respect of the input credit availed by him on the commission agents invoices which indicated service tax paid. On specific query from the bench, ld. counsel submits that the service tax credit availed on the services rendered by commission agent comes to approximately Rs.2.50 lakhs - Conditional stay granted.

Summary

Issues:
1. Waiver of pre-deposit of service tax liability, interest, and penalty under Section 78 of the Finance Act, 1944.
2. Eligibility of cenvat credit on service tax paid for various services.
3. Specific consideration of service tax paid on commission to agents for cenvat credit.

Analysis:
The judgment by Mr. M.V. Ravindran of the Appellate Tribunal CESTAT AHMEDABAD pertains to a stay petition seeking the waiver of pre-deposit of an amount of Rs.4,75,441/- confirmed as service tax liability, interest, and penalty under the Finance Act, 1944. The adjudicating authority and the first appellate authority had confirmed this amount as ineligible cenvat credit, which was availed by the appellant for services including canteen service, housekeeping, commission to agents, and repairing of motor vehicles.

Regarding the service tax paid on canteen service, housekeeping service, and repairing of motor vehicles, the tribunal found prima facie credit to be available to the appellant as these services were deemed necessary for conducting business activities. Reference was made to case laws, particularly highlighting the Resil Chemicals Pvt. Ltd. case, which supported the eligibility of these services as input services.

However, concerning the service tax paid on commission to agents, the tribunal acknowledged the judgment of the Hon'ble High Court of Gujarat in the case of Cadila Healthcare Ltd., which held that such service tax paid would not qualify for cenvat credit benefits. The appellant was directed to deposit Rs.2.50 lakhs within eight weeks for the service tax credit availed on services rendered by commission agents. Upon compliance, the application for the waiver of pre-deposit of the amounts involved was allowed, and the recovery thereof was stayed pending the appeal's disposal.

In conclusion, the judgment provides a detailed analysis of the eligibility of cenvat credit for different services and makes a specific determination regarding the service tax paid on commission to agents, ensuring compliance with the conditions set by the tribunal for the waiver of pre-deposit.