2015 (2) TMI 976 - AT - Service Tax

CENVAT Credit - Service Tax paid on rent-a-cab services which were used for transporting of officials and guests to and from the factory premises - Cenvat credit is sought to be denied only on the ground that and rent-a-cab services in relation to the business activity and more so if such services are rendered for guest. In my considered view, both the lower authorities have overlooked the judicial pronouncement made by the Hon ble High Court of Karnataka in the case of Commissioner of Central Excise, Bangalore v. Stanzen Toyotetsu India (P) Ltd. - 2011 (4) TMI 201 - KARNATAKA HIGH COURT . - those who are visiting the factory premises either be guests or otherwise for the purpose of business activity. In my view, the ratio can be extended and the impugned order to the appellants are unsustainable and liable to set aside the impugned order. - Decided in favour of assessee.

Summary

Issues:
1. Stay petitions for waiver of pre-deposit of ineligible Cenvat credit on Service Tax paid for rent-a-cab services.
2. Denial of Cenvat credit on rent-a-cab services used for transporting officials and guests.
3. Interpretation of judicial pronouncement by Hon'ble High Court regarding rent-a-cab services in relation to business activity.
4. Extending the High Court's ratio to transportation of guests and setting aside the impugned order.

Analysis:
1. The judgment pertains to two stay petitions seeking waiver of pre-deposit of amounts involving ineligible Cenvat credit on Service Tax paid for rent-a-cab services. The issue was whether the appeals could be disposed of without pre-deposit after considering both sides' submissions on the stay petition.

2. The denial of Cenvat credit was based on the usage of rent-a-cab services for transporting officials and guests to and from the factory premises. However, upon perusal of records and submissions, it was found that the credit was sought to be denied solely on the grounds related to business activity and services rendered for guests. The Member referred to a judicial pronouncement by the Hon'ble High Court of Karnataka in a specific case to support the argument.

3. The High Court's judgment highlighted the significance of rent-a-cab services in ensuring employees reach the factory premises on time, directly impacting the manufacturing activity. The judgment emphasized that such services were not merely welfare measures but essential for business operations. The Member interpreted this to apply not only to employees but also to guests or individuals visiting the factory for business purposes.

4. Consequently, the Member extended the ratio of the High Court's judgment to cover transportation of guests and set aside the impugned order. The decision was made on the basis that the impugned order was unsustainable and the appeals were allowed, indicating a favorable outcome for the appellants. The judgment was dictated and pronounced in court, concluding the matter effectively.