2014 (9) TMI 749 - AT - Service Tax

CENVAT Credit - Whether input service credit availed on outdoor catering and mandap keeper services was available to the appellants or not - Held that - There is nothing on record to show whether any expenses were recovered by the appellants from the students. Further there is no allegation has been made in the show cause notice by the revenue. Considering the submission of ld. Counsel and after going through the judgment in the case of Toyota Kirloskar Motors Pvt. Ltd 2011 (3) TMI 1373 - KARNATAKA HIGH COURT specifically in para 8 and 11 wherein these type of activities have been given a broad interpretation and input service credit has been allowed. I find force in the contention of the appellants. Further, present facts are similar to the facts of judgement quoted by the appellants - Decided in favour of assessee.

Summary

Issues:
1. Denial of cenvat credit to the appellant for input services on outdoor catering and mandap keeper services.
2. Interpretation of the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Whether the input service credit availed by the appellant was justified.

Analysis:

Issue 1: Denial of cenvat credit
The appellants appealed against the Order-in-Appeal upholding the denial of cenvat credit by the adjudicating authority for input services related to outdoor catering and mandap keeper services. The show cause notice alleged that the appellant wrongly availed input service credit, leading to a demand for service tax, interest, and penalties. The revenue contended that the input services were not eligible as they were used for organizing a function for students, not directly related to the taxable event. However, the appellants argued that they did not collect money from the students, and the issue was covered by a judgment of the Hon'ble High Court of Karnataka. The definition of "input service" under Rule 2(l) of the Cenvat Credit Rules was crucial in determining the eligibility of the input services for credit.

Issue 2: Interpretation of "input service" definition
The definition of "input service" under Rule 2(l) includes various services used in relation to business activities, such as coaching and training. The appellant requested input service credit based on this definition. The revenue relied on a judgment of the Hon'ble Bombay High Court, emphasizing the wider scope of the term "input service" to cover all services used in the business of manufacturing final products. The judgment highlighted that any service related to the business of manufacturing final products could qualify as an eligible input service, rejecting the revenue's narrow interpretation.

Issue 3: Justification of input service credit
The main issue was whether the input service credit availed by the appellant on outdoor catering and mandap keeper services was legitimate. The appellant argued that the expenses were not recovered from the students and referred to a judgment of the Hon'ble Karnataka High Court to support their position. The Tribunal found that there was no evidence of expenses being recovered from the students, and no such allegation was made in the show cause notice. Considering the broad interpretation of similar activities in previous judgments, the Tribunal allowed the input service credit, concluding that it was rightly availed at the relevant time.

In conclusion, the Tribunal allowed the appeal, emphasizing that the input service credit on outdoor catering and mandap keeper services was justified based on the interpretation of the "input service" definition and the specific circumstances of the case.