2014 (7) TMI 1272 - AT - Service Tax

CENVAT credit - input services - outdoor catering services - medical insurance - Held that - The definition of input service is very broad, which includes activities relating to business , to be covered within its purview, for the purpose of availment of Cenvat credit. It is admitted fact on record that the disputed input services are business related expenditure of the appellant, which is duly reflected in the CAS-4 maintained as per accounting standards. Hence, it will not be prudent to disallow the Cenvat credit on such services. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of Cenvat credit on service tax paid on outdoor catering and medical insurance.

Analysis:

1. Background and Disallowance of Cenvat Credit:
The appeal challenges the order disallowing Cenvat credit of service tax paid on outdoor catering and medical insurance. The appellant, a provider of export services, filed a refund claim under Rule 5 of Cenvat Credit Rules 2004, seeking a refund of service tax credit. The authorities disallowed the refund claim on the grounds that outdoor catering and medical insurance services did not qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004.

2. Appellant's Submission:
The appellant contended that the expenses on outdoor catering and medical insurance were business-related expenditures forming part of the cost of services provided. The appellant argued that these expenses were essential for the business operation and were in compliance with statutory requirements under the Factories Act. The appellant's authorized officer emphasized that the service tax paid on these taxable services was availed as Cenvat Credit.

3. Respondent's Position:
The respondent, represented by the ld. AR, supported the findings in the impugned order disallowing the Cenvat credit on outdoor catering and medical insurance services.

4. Judicial Analysis and Precedents:
The Tribunal analyzed the definition of "input service," noting its broad scope encompassing activities related to business for availing Cenvat credit. Referring to the CAS-4 maintained by the appellant, the Tribunal concluded that the disputed services constituted business-related expenditures integral to the appellant's operations. Citing the judgment of the Hon'ble Mumbai High Court in Coco Cola India Pvt. Ltd. vs. CCE, Pune-III, the Tribunal held that input services connected to the business of providing output services are eligible for Cenvat credit.

5. Previous Tribunal Orders and Legal Precedents:
The Tribunal highlighted a previous order where Cenvat credit on disputed services was allowed, drawing on the judgment of the Hon'ble High Court of Karnataka in Commissioner of Central Excise, Bangalore III vs. Stanzen Toyotetsu India (P) Ltd. The Tribunal found merit in allowing the Cenvat credit on outdoor catering and medical insurance services based on legal precedents and the appellant's business necessity.

6. Decision and Conclusion:
Consequently, the Tribunal set aside the impugned order disallowing the Cenvat credit and allowed the appeal in favor of the appellant. The Tribunal's decision was based on the integral connection of the disputed services to the appellant's business operations and the applicability of legal precedents supporting the eligibility of such services for Cenvat credit.

This detailed analysis of the judgment provides a comprehensive understanding of the issues, arguments presented, judicial reasoning, legal precedents cited, and the ultimate decision rendered by the Tribunal in favor of the appellant.