2015 (10) TMI 1300 - AT - Service Tax

Availment of credit Whether Garden Maintenance Services, Event Management Services, Outdoor Catering Services, Telephone Services & Brokerage Charges are input services? SCN issued denying the credit on grounds that said services do not qualify as input services No nexus found between input and output services by Revenue. Held That - Outdoor Catering Service is essential to run the business of appellant; Garden Maintenance Service is essential in terms of consent to operate, as directed by the Maharashtra State Pollution Control Board (MPCB); Event Management Service is also essential being incurred at opening ceremony or ceremonial occasions; Brokerage Service being incurred for finding residential accommodation for employees, the same is essential for ensuring availability of staff to carry on its business - All services are held as essential inputs for business of Appellant Appeal allowed in favour of the Appellant.

Issues Involved:
1. Availment of credit of Service Tax paid on input services.
2. Interpretation of "Input Services" under Cenvat Credit Rules, 2004.
3. Applicability of the exclusion clause post-April 2011.
4. Time-barred demand and invocation of the extended period.
5. Relevance of various judgments cited by both parties.

Detailed Analysis:

1. Availment of Credit of Service Tax Paid on Input Services:
The primary issue revolves around whether the appellant can avail credit of Service Tax paid on services such as Garden Maintenance, Event Management, Outdoor Catering, Telephone Services, and Brokerage Charges. The appellant contends that these services qualify as "Input Services" under Rule 2(l) of the Cenvat Credit Rules, 2004, as they are used in providing taxable output services. The appellant argues that these services are integral to their business operations and should be eligible for credit.

2. Interpretation of "Input Services" Under Cenvat Credit Rules, 2004:
The appellant's counsel emphasizes that the definition of "input service" is broad and inclusive, covering services related to the business of the assessee. The counsel references the Finance Minister's budget speech and subsequent draft rules, which support a wide interpretation of "input service." The definition includes services used in relation to setting up, modernization, renovation, or repairs of a factory or office, and activities related to business, such as advertising and market research. The appellant argues that the term "includes" in the definition enhances its scope, and the services in question fall within this broad interpretation.

3. Applicability of the Exclusion Clause Post-April 2011:
The appellant challenges the department's interpretation of the exclusion clause introduced post-April 2011, which excludes certain services primarily used for personal use or consumption by employees. The appellant contends that the outdoor catering services provided are a statutory obligation under the Dock Workers (Safety, Health & Welfare) Regulations, 1990, and are essential for the business. Therefore, these services should not be excluded from the definition of "input service." The appellant cites the Supreme Court judgment in Union of India v. Hansoli Devi, which supports a non-redundant interpretation of legislative provisions.

4. Time-Barred Demand and Invocation of the Extended Period:
The appellant argues that the demand raised is time-barred, as they have been regularly filing ST-3 returns reflecting the Cenvat credit availed. The appellant cites the Supreme Court judgment in Pahwa Chemicals Pvt. Ltd., which held that no suppression can be alleged if returns are filed regularly without any positive act of misdeclaration. Therefore, the extended period for raising the demand should not be invoked.

5. Relevance of Various Judgments Cited by Both Parties:
The department relies on the Supreme Court judgment in Maruti Suzuki Ltd. v. CCE, which discusses the definition of "input" and its nexus with the manufacture of final products. The appellant distinguishes this case, arguing that it pertains to "input" rather than "input service." The appellant also references the Bombay High Court judgment in Manikgarh Cement, which held that welfare activities are not covered under "input service." However, the appellant argues that the services in question benefit the business rather than employees personally. The appellant further cites the Karnataka High Court ruling in BASP Industries, which allowed credit for telephone lines installed at employees' residences.

Conclusion:
The Tribunal held that all the services in question-canteen services (outdoor catering), garden maintenance, event management, and brokerage services-are essential for the appellant's business operations and qualify as input services under the Cenvat Credit Rules, 2004. Consequently, the appeal was allowed with consequential benefits, affirming the appellant's entitlement to avail credit of Service Tax paid on these services. The Tribunal emphasized the broad and inclusive nature of the definition of "input service" and the necessity of these services for the appellant's business.

(Pronounced in Court on 18-3-2015)

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