2016 (1) TMI 437 - AT - Central Excise

Cenvat Credit - eligible input services - service tax paid on (a) Agency Charges (b) Tour Operator Service (c) Other Welfare Expenses (d) Catering services (On the amount collected by the appellant from their employees) - Held that - services rendered by the cargo handling services and the service tax paid thereof is eligible to be availed as CENVAT credit and the same view has been expressed by various decisions of the Tribunal. Accordingly in the case in hand I hold that CENVAT credit availed on agency services is eligible to be availed as CENVAT credit. Tour operator services are for transportation of employees and credit of tax paid is eligible as input service. Other welfare service i.e. service tax paid on the services of purchase of gift and setting up of mandap in the factory premises for celebrating Dussera festival is not eligible to be held as credit as this seems to be not connected with the business of the appellant hence the CENVAT credit on this services is upheld as incorrectly availed and needs to be reversed by the appellant. - regarding catering services the service tax paid on the employees contribution cannot be availed as CENVAT credit. Decided partly in favor of assessee.

Summary

Issues: Denial of CENVAT credit on various services including agency charges, tour operator service, other welfare expenses, and catering services collected from employees.

The judgment addresses the denial of CENVAT credit on different services. Firstly, regarding "agency charges" and "tour operator charges," the judge refers to the settled law established by the Hon'ble High Court of Gujarat and various Tribunal decisions, allowing CENVAT credit for services like cargo handling. Consequently, the CENVAT credit on agency services is deemed eligible.

Moving on to the service tax paid on "tour operator service," the judge cites the Hon'ble High Court of Karnataka's ruling in a similar case, emphasizing that services for employee transportation qualify as input services. Therefore, the CENVAT credit for the tax paid on tour operator services is permitted.

However, concerning "other welfare services," such as purchasing gifts and setting up a mandap for a festival, the judge deems these expenses unrelated to the business activities of the appellant. As a result, the CENVAT credit for these services is considered incorrectly availed and must be reversed by the appellant.

Regarding the CENVAT credit on "catering services" paid on amounts collected from employees, the judge cites the Hon'ble High Court of Bombay's decision in the Ultratech Cement case, which established that service tax on employees' contributions cannot be claimed as CENVAT credit. Therefore, the credit availed on other welfare expenses and catering charges collected from employees is held ineligible and correctly denied by the lower authorities, requiring the appellant to reverse the amount along with interest.

In conclusion, the judgment allows CENVAT credit for agency and tour operator services but denies the credit for other welfare charges and catering charges collected from employees. The appeals are disposed of accordingly, with no penalty imposed on the appellant due to the issue being discussed in various forums.