2014 (8) TMI 250 - AT - Central Excise

CENVAT Credit - input services - event management service - proof of holding event in a temple premises - Held that - The appellant claimed to have remitted service tax on event management service provided by a third party to facilitate organisation of a dealer/ retailer meet for promotion, marketing, advertisement and promotion of its products, though in a temple premises. If this fact is to be rebutted, the Authorities below should have cogent and clear evidence to come to a contrary conclusion. At any rate speculation and vacuous hypothesis cannot be a substitute for evidence, to support a finding. The premise of the Authorities below, that temple premises is used only for religious functions and for no other social activity is misconceived. It is well established by contemporaneous social evidence as well that temple premises are employed for a variety of social functions including marriages - adjudication order passed by the primary authority as confirmed by the order of the Appellate Commissioner impugned is unsustainable and is accordingly quashed - Decided in favour of assessee.

Summary

Issues: Disallowance of Cenvat credit on event management service for organizing a function in a temple premises.

Analysis:
The appeal was filed against the order disallowing Cenvat credit of a specific amount and directing its recovery under the Cenvat Credit Rules, 2004. The appellant, a manufacturer of clinker and cement, availed input service credit for service tax remitted for 'event management' organized at a temple within the factory premises. The primary authority disallowed the credit under Rule 14 of Cenvat Credit Rules, 2004. The appellant claimed that the event management service was used for advertisement and sales promotion of its products, which was an input service related to its manufacturing activity.

During the adjudication proceedings, the appellant argued that the event was organized for marketing and advertisement purposes, and the service tax was remitted on a taxable service utilized for clearing excise duty liabilities. The primary authority acknowledged that input service credit for 'event management' service used for sales and promotion activities is admissible but raised concerns regarding the event being organized at a temple premises. The primary authority questioned the lack of evidence supporting the claim that the event was for business purposes, as it was organized for a temple function.

The Appellate Commissioner rejected the appeal, stating that organizing a function in a temple cannot be considered a sales promotion activity. However, the judgment highlighted the irrationality in the authorities' reasoning, emphasizing that the definition of 'event management' includes services related to planning, promotion, and organizing various events. The judgment criticized the lack of clear evidence to refute the appellant's claim and noted that temple premises are used for various social functions, including those related to business activities.

Consequently, the judgment concluded that the orders disallowing the Cenvat credit were unsustainable and quashed the adjudication order. The appeal was allowed without any costs, emphasizing the need for concrete evidence to support findings rather than speculation.