2015 (8) TMI 695 - AT - Service Tax

Denial of CENVAT Credit - manpower recruitment service and outdoor catering service - Held that - manpower recruitment agency mentioned in the invoice instead of man power recruitment service, input service cannot be denied on this ground. Accordingly, the impugned order is set aside. As per amended statute with effect from 1.4.2011, outdoor catering service has been excluded from the definition of input service. Appellant is not entitled to take input service credit on outdoor catering service of ₹ 78 ,312 /-. Further, Accumulated show cause notice was issued to the appellant in 2012 by invoking the provision of Rule 2(l) of CCR , 2004 prior to 2011. In these circumstances, provision denying input service credit on outdoor catering service came into existence with effect from 1.4.2011. Therefore, penalty is not imposable on the appellant. - input service credit on outdoor catering service along with interest is denied to the appellant - Decided partly in favour of assessee.

Summary

Issues:
1. Denial of input service credit on manpower recruitment service and outdoor catering service.

Analysis:
The appellant appealed against the impugned order denying input service credit on manpower recruitment service and outdoor catering service. The appellant, a manufacturer of excisable goods, faced the denial of credit due to non-mentioning of the service name in the invoices for manpower recruitment service and the lack of direct relation of outdoor catering service to manufacturing. The appellant argued that non-mentioning the service name in the invoice does not negate the entitlement to input service credit. The appellant also cited a decision by the Hon'ble Bombay High Court to support the allowance of input service credit for outdoor catering service.

The opposing argument contended that as per Rule 2(l) of Cenvat Credit Rules, 2004, effective from 1.4.2011, the appellant was not eligible for input service credit on outdoor catering service. The Tribunal considered the submissions and found that while the invoice mentioned a manpower recruitment agency instead of the service, this discrepancy did not warrant denial of input service credit. However, regarding outdoor catering service, the Tribunal noted the amendment in the statute from 1.4.2011, which excluded outdoor catering service from the definition of input service. Consequently, the appellant was deemed ineligible for input service credit on outdoor catering service. The Tribunal also observed that the show cause notice issued in 2012 was prior to the amendment, thus penalty imposition was not justified.

In conclusion, the Tribunal set aside the impugned order denying input service credit on manpower recruitment service but upheld the denial of credit on outdoor catering service due to the statutory amendment. The appellant was not penalized due to the timing of the notice vis-a-vis the statutory change. Therefore, the appeal was disposed of with the denial of input service credit on outdoor catering service.