2016 (6) TMI 280 - AT - Service Tax

Allowability of Cenvat credit - Rent-a-cab and Air Travel Agent Service - services used for employees benefit - Held that - Rent-a-cab service and Air Travel Agent service though used by employees of the appellant but undisputedly for the performance of the appellant company s business. Therefore, both the services are input service. This Tribunal in the various judgments cited by the Ld. Chartered Accountant allowed the Cenvat Credit in respect of both the services. I am also convinced with the submission and presentation of the books of accounts by the Ld. Chartered Accountant that expenses towards Rent-a-cab service and Air Travel Agent service were booked as expenditure in the Profit and Loss Account of the appellant. I, therefore, do not find any reason why the Cenvat Credit should not be allowed on Rent-a-cab service and Air Travel Agent service to the appellant. The Rent-a-cab service was excluded from the definition of input service. Therefore prior to 01-04-2011 the Cenvat Credit was admissible. As per my above discussion, and the settled legal position, the appellants are entitled for the Cenvat Credit in respect of Rent-a-cab and Air Travel Agent services. - Decided in afvour of appellant

Summary

Issues:
1. Disallowance of Cenvat Credit on Rent-a-cab and Air Travel Agent services for employee benefit.

Analysis:
The appeal challenged the Order-in-Appeal upholding the disallowance of Cenvat Credit on Rent-a-cab and Air Travel Agent services used by the appellant's employees. The appellant contended that both services were essential for the performance of the company's business. The appellant cited precedents where Cenvat Credit was allowed for similar services. The appellant's Chartered Accountant argued that the expenses for these services were recorded as business expenditures in the company's accounts, making them eligible for credit.

The Revenue, represented by the Assistant Commissioner, supported the findings of the original order disallowing the Cenvat Credit. However, the Tribunal, after considering both parties' submissions, concluded that Rent-a-cab and Air Travel Agent services were indeed input services used for the appellant's business activities. The Tribunal noted that the expenses for these services were accounted for as business expenditures in the company's Profit and Loss Account. Referring to legal precedents and the accounting principles, the Tribunal ruled in favor of the appellant, allowing the Cenvat Credit on Rent-a-cab and Air Travel Agent services. The Tribunal emphasized that prior to 1st April 2011, Rent-a-cab services were considered admissible for Cenvat Credit, supporting the appellant's claim for credit on these services. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal's decision revolved around the eligibility of Rent-a-cab and Air Travel Agent services for Cenvat Credit, emphasizing their essential role in the appellant's business activities. The Tribunal's ruling was supported by legal precedents and the accounting treatment of these services as business expenditures, ultimately granting the appellant the Cenvat Credit on both services.