2015 (10) TMI 1301 - HC - Service Tax

Utilisation of CENVAT Credit on outdoor catering service Whether the service is input service? - Cost of outdoor service recovered from workers; employer cannot take credit of that part - Held That - CENVAT credit facilities are available to manufacture on outdoor catering service as decided by Larger Bench - Difference pointed out by Respondent not shown Decided in favour of the Appellant.

Summary

Issues:
Challenge to Final Order of CESTAT regarding Cenvat credit for outdoor canteen facilities in a manufacturing business.

Analysis:
The appellant, engaged in cement manufacturing, provided canteen facilities outsourced to cater to workers' needs. The dispute arose when the Department denied Cenvat credit for Service Tax claimed by the appellant, leading to a series of appeals. The key issue was whether the appellant could avail Cenvat credit for outdoor canteen services.

The Court considered substantial questions of law, including the eligibility of outdoor catering service as an input service for Cenvat credit and the applicability of a previous Tribunal ruling. The appellant relied on a Larger Bench decision supporting Cenvat credit for such services, while the respondent cited other Tribunal decisions suggesting otherwise.

The Court noted the conflicting views presented by both parties. It highlighted the precedent set by the Larger Bench, indicating that Cenvat credit could be availed for outdoor catering services. The Court also emphasized that if costs were borne by employees, the employer could not claim such facilities.

The Court found that the show cause notice did not address the crucial distinction highlighted by the respondent, leading to the conclusion that the order denying Cenvat credit was flawed. As the Larger Bench's stance supported the appellant's position, the Court set aside the Tribunal's order and allowed the appeal. The respondent was granted the liberty to pursue the matter based on the identified difference in a new proceeding.

In conclusion, the Civil Miscellaneous Appeal was allowed, overturning the Tribunal's order. The Court upheld the appellant's entitlement to Cenvat credit for outdoor canteen services, emphasizing the importance of following established legal precedents in tax matters.