2015 (9) TMI 1334 - AT - Service Tax

Denial of CENVAT Credit - Outdoor Catering Service, Housekeeping, Commission to Agents, and Repair of Motor Vehicles service - services have no nexus with the business activity of the Appellant - Held that - A canteen was installed in their factory premises and supplied various food articles including tea, coffee, snacks, break-fast etc to their staff members, employees and workers to run their business activity of production and sale of goods. It is essential to maintain the Factory & Office Premises, clean & neat, with the help of the Housekeeping Agency and this being the position, the Service of a Housekeeping Agency, is said to have been availed of, by them, in connection with the Business Activity of Production and Sale of finished goods. - So, the Appellant is eligible to avail input service credit of housekeeping service, which is related to the better maintenance and pollution control of the factory premises. Dispute relating to demand of tax on commission agent was decided by Hon ble Gujarat High Court in the case of Cadila Healthcare Limited (2013 (1) TMI 304 - GUJARAT HIGH COURT). Hence, the Appellant availed the CENVAT credit on a bonafide impression. Denial of CENVAT Credit on the extended period of limitation cannot be sustained. Credit availed on repair or maintenance service of vehicles used by their staff members and therefore, there is no reason to deny the Service Tax credit on repair or maintenance service. - Decided party in favour of assessee.

Summary

Issues:
Denial of input service credit on Canteen Service, Housekeeping, Commission to Agents, and Repair of Motor Vehicles under Chapter 84 of the Schedule to the Central Excise Tariff Act, 1985.

Canteen Service (Outdoor Catering Service):
The Appellants argued that the canteen service provided to staff members and workers was essential for the business activity of production and sale of goods. They cited a Bombay High Court case to support their claim for CENVAT credit on Outdoor Catering Service. The Tribunal held that the Appellant could avail input service credit on Outdoor Catering Service except for the portion of cost borne by the workers.

Housekeeping:
The Appellants justified the need for housekeeping services to maintain cleanliness in factory premises for pollution control and a better working environment. Referring to a Tribunal case following a Bombay High Court decision, the Tribunal allowed input service credit on housekeeping services related to maintaining factory premises.

Commission to Agents:
The dispute revolved around input service credit on Commission Agent service. The Appellant argued that the demand of tax was time-barred and cited Tribunal decisions to support their case. The Tribunal found that the Appellant availed CENVAT credit on a bona fide belief and set aside the denial of credit for the extended period of limitation.

Repair to Motor Vehicles:
The Appellant claimed CENVAT credit on Service Tax paid for repair and maintenance of commercial vehicles used by staff members. Citing a Tribunal case on travel service, the Tribunal allowed the credit on repair or maintenance service of vehicles used by staff members.

In conclusion, the Tribunal set aside the denial of input service credit on Housekeeping and Repair of Motor Vehicles. The denial of CENVAT Credit on Commission Agent was upheld, but the demand for the extended period of limitation was set aside. Regarding the CENVAT Credit on Outdoor Catering Services, the Appellant was directed to reverse the credit on a portion of the cost borne by the workers. The penalty imposed on the Appellant was set aside as it pertained to the admissibility of input service credit.