2015 (10) TMI 117 - AT - Service Tax

Denial of CENVAT Credit - outdoor Catering service - amount collected on the head canteen charges from employee - Held that - The show cause notice does not allege that the respondents have been collecting amounts from the employees. The original adjudicating authority has relied on a single salary slip in which ₹ 276/- has been charged as canteen charges, and denied credit of ₹ 9,35,580/- towards catering services. The Commissioner (Appeals) has observed that the balance sheet of the respondents for the period 2007-08 to 2010-2011 shows that the respondents have incurred expenses of ₹ 32,29,583/-, ₹ 47,23,412, ₹ 41,30,997 and ₹ 78,88,902/- towards staff and worker s welfare. Therefore it shows that expenses are incurred by the respondents. A single salary ship showing a meager amount of ₹ 276/- is too feeble to be relied when the appellants have properly accounted the expenses in these heads in their books of accounts. - No infirmity in impugned order - Decided against Revenue.

Summary

Issues:
1. Allowance of Cenvat Credit on Catering Services.

Analysis:
1. The case involves the allowance of Cenvat credit on catering services availed by the respondents, who are engaged in manufacturing Two Wheeler Parts. The primary issue was the denial of credit by the adjudicating authority based on the collection of canteen charges from an employee's salary. The Commissioner (Appeals) overturned this decision, noting that the balance sheet of the respondents clearly indicated expenses towards canteen services, thereby supporting the claim for credit.

2. The Departmental Representative (DR) challenged the Commissioner's decision, arguing that credit for catering services should not be allowed. The DR cited a previous case to support the argument. However, the counsel for the respondents contended that the issue of collecting expenses from employees was not part of the original Show Cause Notice, and the denial of credit based on this ground was beyond the scope of the notice.

3. Upon hearing both sides and examining the records, the presiding Member found merit in the respondent's argument. It was observed that the show cause notice did not mention the collection of amounts from employees as a ground for denying credit. The adjudicating authority's reliance on a single salary slip showing a nominal amount for canteen charges was deemed insufficient, especially considering the substantial expenses reflected in the respondents' balance sheet for staff welfare. The Member concluded that the denial of credit based on a minor discrepancy was unwarranted, as the respondents had adequately accounted for expenses in their financial records.

4. Consequently, the presiding Member upheld the decision of the Commissioner (Appeals) and dismissed the appeal filed by the Revenue, affirming the allowance of Cenvat credit on catering services for the respondents engaged in manufacturing Two Wheeler Parts.