2016 (7) TMI 364 - AT - Service Tax

Cenvat Credit - input services for providing output services of management, Maintenance and Repair service and also Consulting Engineer s Service - credit was availed on Scheme operator s service, Outdoor Caterer s service and Group Insurance Service for the period October, 2009 to September, 2010 - Held that - the issue is covered by the judgement of the Karnataka High Court in the case of CCE, Bangalore Vs. Bell Ceramics Ltd. 2011 (9) TMI 792 - KARNATAKA HIGH COURT - Credit allowed - Decided in favor of assessee.

Summary

Issues: Cenvat credit on input services - Management, Maintenance and Repair service, Consulting Engineer's Service, Scheme operator's service, Outdoor Caterer's service, Group Insurance Service. Rejection of Cenvat credit, demand of interest, imposition of penalty under CCR, 2004.

Analysis:
1. The appellant company, engaged in providing Operation and Maintenance of Power Plants and Consulting Engineer's service, availed Cenvat credit on various input services. The Dy. Commissioner rejected the claim, demanded interest, and imposed a penalty. On appeal, the Ld. Commissioner (Appeals) upheld the decision. The appellant contended that the input services were essential for their business activities, citing a previous favorable order by the Ld. Commissioner (Appeals) for a different period. The appellant emphasized that the services were used for employees' welfare, supported by a Chartered Accountant's Certificate. The appellant objected to the invocation of the proviso to Section 73(1) for suppression of facts.

2. The Revenue, represented by the Ld. AR, supported the OIA findings and argued that the case laws cited by the appellant were not applicable to output services. After hearing both parties, the Tribunal referred to a judgment of the Karnataka High Court in the case of CCE, Bangalore Vs. Bell Ceramics Ltd. The Tribunal noted that any service used directly or indirectly in or in relation to the manufacture of final products constitutes an input service. The judgment highlighted that catering service, rent-a-cab, transportation services, and tax paid on these services are considered as input services. Relying on the Karnataka High Court's decisions, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any.

3. The Tribunal's decision was based on the legal precedent established by the Karnataka High Court, emphasizing the broad interpretation of input services in relation to the business activities. The judgment provided clarity on the eligibility of various services for Cenvat credit, aligning with the appellant's contentions regarding the necessity and relevance of the input services for their operations. The Tribunal's analysis underscored the importance of considering the specific business context and operational requirements while determining the eligibility of input services for availing Cenvat credit.