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2016 (11) TMI 786 - AT - Service TaxRectification of Mistake - expense of the membership of the Club has been booked under the head of Staff Welfare Expenses and therefore, credit of same should not be allowed - Held that - I find that the only ground on which the rectification has been sought is that the expenditure undertaken on the services of Club Membership of the Director was booked under Staff Welfare Expenses under Schedule 17 of the Profit and Loss Account. I find that the order of the Tribunal is very clear in this regard and clearly holds that the membership of the Business Club is indirect related to the promotion of business of the appellant. In view of this, it cannot be said that there is no nexus between the services availed and the manufacture of goods irrespective of the head under which the said expenses is booked in the balance sheet - ROM application dismissed
Issues:
Rectification of Mistake regarding expenses of club membership booked under "Staff Welfare Expenses" and its nexus with business activities. Analysis: The Revenue filed an application for Rectification of Mistake against an order, arguing that expenses of club membership booked under "Staff Welfare Expenses" should not be allowed as credit. The Revenue relied on a decision of the Bombay High Court stating that expenses must have a nexus with the business activity to qualify as an input service. The Revenue contended that the expenditure on club membership does not have a nexus with the manufacture of goods. The appellant's Counsel relied on the impugned order, and the Tribunal considered the rival submissions. The Tribunal found that the expenditure on Club Membership of the Director, booked under "Staff Welfare Expenses," is indirectly related to the promotion of the business of the appellant. The Tribunal held that there is a nexus between the services availed and the manufacture of goods, regardless of the head under which the expenses are booked in the balance sheet. Ultimately, the Tribunal dismissed the Rectification of Mistake application, emphasizing that the membership of the Business Club is related to the promotion of the appellant's business activities. The judgment was pronounced in court on 3-6-2016.
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