2014 (10) TMI 452 - AT - Service Tax

Denial of CENVAT Credit - Outdoor Catering Service - Convention Service - Event Management Service - Market Research Service - Held that - The credit of Service Tax paid on outdoor catering service cannot be denied since reclassification of services is to be considered at the receiving end. Therefore, what is required to be considered at the receiving end is whether Service Tax was paid or not; and whether the services received were covered under the definition of input service or not. In the absence of clear finding whether services received were covered by the definition of input service, the ground on which credit denied cannot be sustained. In any case, after going through the invoices, I find that services were received for business promotion and sales promotion of the appellant and therefore, credit of Service Tax paid cannot be denied. Credit of Service Tax paid on this service cannot be denied since reclassification of service is to be considered at the receiving end. What is required to be considered at the receiving end is whether the service was covered by input service under Cenvat Credit Rules or not; and under which category invoices have been issued. In any case, invoices were issued by two Hotels in relation to activities of sales promotion/business of the appellant. Therefore, appellant is eligible for credit of Service Tax paid. - entire amount is in relation to one invoice. Since event management service was rendered for their customers and employees and it was done for sales promotion/business of the appellants, I consider that credit of Service Tax paid on this service cannot be denied. Credit of Service Tax paid amounting to ₹ 62,424 has been denied on Market Research Service. Learned Chartered Accountant submits that company conducted a survey to find out about women employees leadership. I do not understand and appreciate on what basis and under which manner this service can be covered by definition of input service . I find this activity undertaken by appellant to understand the position of women in society has nothing to do with the business. This being the case, credit has been correctly denied. - Decided partly in favour of assessee.

Summary

Issues: Denial of Cenvat credit on various services - outdoor catering service, convention service, event management service, and market research service. Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004.

Outdoor Catering Service: The appellant's Cenvat credit of Service Tax paid on outdoor catering service was denied, totaling to Rs. 5,29,647/- for the period from April 2006 to March 2007. The Revenue objected to the credit taken, stating that the services received could not be classified under outdoor catering service. However, it was emphasized that reclassification of services should be considered at the receiving end. Upon review of the invoices, it was found that the services were received for business promotion and sales promotion, making the credit of Service Tax paid valid and denying the ground for denial of credit.

Convention Service: An amount of Rs. 1,37,700/- was denied as Cenvat credit on convention service, with the objection that it was not actually outdoor catering service. It was reiterated that reclassification of service should be considered at the receiving end, based on whether the service was covered under input service under Cenvat Credit Rules. In this case, the invoices were related to activities of sales promotion/business of the appellant, making them eligible for the credit of Service Tax paid.

Event Management Service: A Cenvat credit of Rs. 91,669/- was denied on event management service. The Chartered Accountant argued that the service was rendered for customers and employees for sales promotion/business of the appellants, justifying the eligibility for the credit of Service Tax paid on this service.

Market Research Service: The denial of Cenvat credit on market research service amounting to Rs. 62,424/- was upheld. The appellant conducted a survey to understand women employees' leadership, but it was found that this activity had no direct relation to the business. Therefore, the denial of credit was considered appropriate in this case.

Penalty Imposition: The issue of penalty under Rule 15 of Cenvat Credit Rules, 2004 was deemed debatable, involving interpretation of law and service definitions. Consequently, the penalty was deemed not imposable in this case.

The appeal was decided in favor of the appellant concerning the Cenvat credit on outdoor catering service, convention service, and event management service, while the denial of credit on market research service was upheld. Additionally, the penalty was not imposed considering the debatable nature of the issue.