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2017 (6) TMI 815 - AT - Service TaxCENVAT credit - input service - Outdoor Catering Services - extended period of limitation - penalty - Held that - As per inclusive definition of input service Rule 2(l) all activities relating to business are input services. The definition does not say activities relating to business pertaining to manufacture or provision of output services. Thus all input services used in activities relating to business are input services. The appellant assessee is availing outdoor catering services in the canteen as per obligations under Factories Act, 1948. Failure to do so would entail penal consequences under Section 46 of the Factories Act, 1948. Therefore, under the scheme of the Cenvat Credit Rules, 2004, Service Tax paid on all those services which the appellant assessee has utilised directly or indirectly, in or in relation to manufacture of the final products is entitled to claim the credit. Appeal allowed - decided in favor of assessee.
Issues:
1. Invocation of extended period of limitation. 2. Availment of Cenvat Credit on Outdoor Catering Services. 3. Interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004. Issue 1: Invocation of extended period of limitation The First Appellate Authority partly allowed the assessee's appeals by holding that longer period of limitation is not invocable and set aside the penalties completely. The Revenue was aggrieved by this decision and filed an appeal. The Revenue argued that the Commissioner(Appeals) erroneously applied the ratio of a judgment by the Hon'ble Apex Court in a different case, emphasizing that the said judgment did not involve the invocation of an extended period of limitation. The Tribunal heard both sides and examined the appeal records to reach a decision. Issue 2: Availment of Cenvat Credit on Outdoor Catering Services The appellant availed input service credit on Service Tax paid on Outdoor Catering Services used in the canteen within the factory. The Revenue contended that the Commissioner(Appeals) misapplied the judgment of the Hon'ble Apex Court, arguing that the period involved in the judgment did not pertain to the invocation of an extended period of limitation. The Tribunal analyzed the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004, which includes services used in activities relating to business. The Tribunal referred to various decisions to support the inclusion of catering services under input services, especially when it is a statutory obligation under the Factories Act, 1948. The Tribunal concluded that the appellant is entitled to claim credit for Service Tax paid on services used directly or indirectly in relation to the manufacture of final products. Issue 3: Interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004 The Tribunal examined the definition of input service under Rule 2(l), which encompasses services used in activities relating to business. The Tribunal highlighted that all input services used in activities relating to business are considered input services, irrespective of their connection to the manufacture or provision of output services. Referring to case laws, the Tribunal emphasized that expenses incurred on outdoor catering services, as a statutory obligation under the Factories Act, 1948, are included in the cost of production. The Tribunal noted that failure to provide such services would lead to penal consequences under the Factories Act. Consequently, the Tribunal allowed the appeals filed by the appellant assessee and dismissed the appeals filed by the Revenue, with the exclusion of amounts recovered from employees, if any. This detailed analysis of the judgment provides insights into the issues of invocation of extended period of limitation, availment of Cenvat Credit on Outdoor Catering Services, and the interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004, as addressed by the Appellate Tribunal CESTAT KOLKATA.
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