2017 (4) TMI 843 - AT - Central Excise

CENVAT credit - input services - Township security service - Transport services for employees/Guest - Canteen Services - professional/consultancy services - Held that - In the case of rent-a-cab services the Ld. Counsel has conceded that the respondent is not eligible for credit of this service after 01.04.2011 to the tune of ₹ 14,265/-. Therefore, the credit on rent-a-cab services/transportation services to the tune of ₹ 14,265/- is disallowed. Outdoor catering services - Held that - It is also brought out that only a negligible amount is collected from the employees as administration charges. The rest is borne by the appellant - when out of total amount only negligible amount is recovered as administration cost which is not intended to defray from the cost of food the same cannot be considered as charges being recovered from the employees - credit allowed. Township security services - Consultancy services - Held that - Township security services and Consultancy services are availed by respondent prior to 01.04.2011. During the relevant period the definition of input services was so wide as it included the words activities relating to business - there is no ground to interfere with the view of the Commissioner (Appeals) in not imposing penalty in this regard. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Appeal against disallowed credit on various input services.

Analysis:
The Department filed an appeal against the Commissioner (Appeals) order disallowing credit on input services like Township security service, Transport services, Canteen Services, and professional/consultancy services. The original authority confirmed the demand for all services, but the Commissioner (Appeals) allowed credit for all services except Township security services. The Department appealed the credit allowed for Transport services, canteen services, and consultancy services, and the non-imposition of penalty for disallowed township services.

The Department argued that canteen services do not qualify as input services as the service tax amount was borne by the contractor, not the respondent. They contended that after 01.04.2011, rent-a-cab services were excluded from input services and, without evidence of statutory obligations, were not eligible for credit. The Department also believed that irregular credit availed should have led to the imposition of a penalty for township security services.

In response, the respondent's counsel highlighted that most demands were before 01.04.2011, making Township and Consultancy services eligible for credit. They agreed that post-01.04.2011, rent-a-cab services were not eligible for credit. Regarding canteen services, they argued that the service tax was paid by the respondent, and the canteen was maintained in compliance with the Factories Act, 1948.

The Tribunal found that rent-a-cab services post-01.04.2011 were not eligible for credit, disallowing &8377; 14,265. The Tribunal also upheld the credit for canteen services, as the service tax was paid by the respondent and only a negligible amount was collected from employees. The Commissioner (Appeals) was justified in not imposing a penalty for township security services, as they were availed before 01.04.2011 when most services were eligible for credit under the broad definition of input services.

Conclusively, the Department's appeal was partly allowed by disallowing credit for rent-a-cab services post-01.04.2011. The impugned order was modified to reflect this decision, with consequential reliefs granted accordingly.