2015 (12) TMI 813 - AT - Service Tax

Cenvat credit - rent-a-cab service - service was utilised by Assessee for providing currency chest service which is not a taxable service and hence is exempted from paying Service Tax - Held that - Indeed the currency chest is required and maintained for providing banking and financial services. It can be nobody s case that the currency chest was not used to provide their output service viz. banking and financial services, inasmuch as such cash is required for providing various services which are covered under banking and financial services (as mentioned in para 2(iv) above. It is the appellants choice in how much safety they want to keep their cash and they have chosen currency chest for safety and security of their cash. Cash management including transport of cash to and from the currency chest is thus relatable to providing banking and financial services and the services (security services and rent-a-cab service), hiring security vans are clearly required for such cash management/transfer and therefore, they are clearly within the ambit of input services - impugned services constitutes input service in respect of the appellants non-exempt output service. Accordingly, the impugned input credit is clearly admissible which makes the impugned demand unsustainable. For the same reason, the Revenue s appeal also does not sustain. - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on rent-a-cab service utilized for providing currency chest service.
2. Allowing Cenvat credit on security services utilized for providing currency chest service.

Analysis:
1. The appellant, M/s. Bank of India, appealed against the Order-in-Appeal confirming a Service Tax demand due to the denial of Cenvat credit on rent-a-cab service used for currency chest service. The appellant argued that the currency chest is essential for storing cash as per RBI requirements and for providing banking and financial services. They highlighted the need for security in transporting cash to and from the currency chest. The appellant contended that there is no direct correlation required between input service credit and output service, citing precedents like Jaypee Sidhi Cement Plant v. C.C.E., Bhopal.

2. The Revenue appealed against the same Order-in-Appeal for allowing Cenvat credit on security services used for the currency chest service. The Revenue argued that since currency chest service is non-taxable, Cenvat credit for services related to it should not be permitted. They emphasized that the security services were solely provided for the purpose of the currency chest service, specifically for the secure transport of cash.

3. The Tribunal considered both arguments. It noted that the appellant is engaged in providing banking and financial services, with the currency chest being crucial for these operations. The Tribunal clarified that currency chest service itself is not a taxable service under the Finance Act, 1994. Therefore, claiming it as an exempted service is illogical, as an exempted service must first be taxable. The Tribunal highlighted that the currency chest is used for providing banking and financial services, such as foreign exchange transactions, ATM withdrawals, and handling customer cash, all subject to Service Tax.

4. The Tribunal concluded that the currency chest is integral to providing the appellant's banking and financial services. Cash management, including the secure transport of cash to and from the currency chest, is directly related to these services. Therefore, the security services and rent-a-cab service, essential for cash management, fall within the ambit of "input services." Consequently, the Cenvat credit for these services is admissible as input services for the appellant's non-exempt output services. As a result, the demand for Service Tax was deemed unsustainable, leading to the allowance of the appellant's appeal and the rejection of the Revenue's appeal.