2014 (5) TMI 1017 - AT - Service Tax

Waiver of pre-deposit - cenvat credit - input service - bus transport service - Held that - in the case of Stanzen Toyotetsu India (P) Ltd. (2011 (4) TMI 201 - KARNATAKA HIGH COURT) it is held that for providing transport service for taking the employees to the factory, Cenvat credit on the transport service is available to the assessee. However, I find that the activities involving social gathering, marriage, picnic and taking children to the school will not fall in the category of business activity. Accordingly, the applicant is directed to deposit Rs. 20,000 within four weeks and report compliance on 19-10-2012. On such compliance, there shall be stay of recovery in respect of balance amount during the pendency of the appeal. - Stay granted partly.

Summary

Issues:
1. Stay application for waiver of pre-deposit and stay of recovery of confirmed amount.
2. Eligibility of Cenvat credit for Service Tax paid on bus transport service for factory staff.

Analysis:
The applicant filed a stay application seeking waiver of pre-deposit and stay of recovery of Rs. 1,97,283/- confirmed by lower authorities. The main issue in the appeal was the eligibility of Cenvat credit in relation to Service Tax paid on bus transport services for the factory staff. The applicant argued that the bus services were used exclusively for transporting employees from their residence to the factory, with expenses covered by business-related agreements. They had a contract with the service provider, and bills showed that most expenses were for employee commuting. The applicant cited a previous decision by the Hon'ble High Court of Karnataka to support their case.

The Revenue contended that the bus services were also used for non-business purposes like social gatherings, marriages, picnics, and transporting children to school, which were not related to the applicant's business activities. The lower authorities had confirmed the demand based on these additional uses of the bus services. After considering both arguments, the Member (T) referred to the High Court of Karnataka's decision in Stanzen Toyotetsu India (P) Ltd., which allowed Cenvat credit for transporting employees to the factory. However, activities like social gatherings, marriages, picnics, and school transportation were deemed unrelated to business activities. Consequently, the applicant was directed to deposit Rs. 20,000 within four weeks, with a stay of recovery for the remaining amount during the appeal's pendency. Compliance was to be reported by a specified date.

In conclusion, the Tribunal granted partial relief to the applicant by allowing Cenvat credit for transporting employees to the factory but required a deposit for non-business-related bus service expenses. The decision was based on a balance between business-related transportation and other non-business activities using the bus services.