2009 (6) TMI 54 - AT - Service Tax

Input Service Cenvat Credit of service tax paid on GTA and outdoor catering service Rule 2(l) Held that - during the period March, 2005 to July 2005 cenvat credit of service tax paid on GTA was allowed hence demand is not maintainable - Whether the cost of food is borne by the worker or by the factory, the same will form part of expenditure incurred by the manufacturer and will have a bearing on the cost of production. In view of the same, employment of outdoor caterer for providing catering services has to be considered as an input service relating to the business and Cenvat credit in respect of the same will be admissible

Summary

Issues:
1. Waiver of predeposit and stay of recovery of demanded amount for irregular input service credit under 'Goods Transport Agency' and 'Out-door Catering Service'.
2. Disposal of appeal regarding service tax paid on freight for transporting finished goods.
3. Credit availed under outdoor catering service for supplying food to employees in the factory canteen.

Analysis:
1. The application sought waiver of predeposit and stay of recovery for an amount demanded due to irregular input service credit under 'Goods Transport Agency' and 'Out-door Catering Service'. The Tribunal found that the appeal could be disposed of finally without further hearing. The Commissioner (Appeals) confirmed the demand of credit of service tax paid on freight for transporting finished goods. However, the Tribunal referred to previous decisions and a Larger Bench decision that clarified outward transportation of final products should be treated as an input service. Consequently, the demand for credit availed of tax paid under GTA service was deemed unsustainable and dismissed.

2. The balance demand related to credit availed under outdoor catering service for supplying food to employees in the factory canteen. The Commissioner (Appeals) had denied the credit based on a previous Tribunal decision. The appellants relied on a Larger Bench decision that considered outdoor catering as an input service related to the business. The Tribunal concurred with this interpretation, stating that the employment of an outdoor caterer for providing catering services should be considered an input service. As a result, the appellants were entitled to credit of service tax paid under Out-door Catering Services for serving food to its employees in the factory canteen. The impugned demand was vacated, and the stay application was disposed of accordingly.