2017 (10) TMI 86 - HC - Service Tax

CENVAT credit - input services - outdoor catering services - Rent-a-Cab services - Held that - In case of Principal Commissioner v. Essar Oil Ltd. 2015 (12) TMI 1062 - GUJARAT HIGH COURT , Division Bench of this Court on the question of charges for rent a cab services, and held that the term input service would mean any service used by the manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final product from the place of removal and credit allowed. On the question of charges for rent a cab service, Division Bench of this Court in case of Commissioner of Central Excise v. Ferromatik Milacron India Ltd., 2010 (4) TMI 649 - GUJARAT HIGH COURT , has held that canteen services which are indispensable in relation to manufacture of the final products would certainly fall within the ambit of input service and the credit was allowed. Appeal dismissed - decided against Revenue.

Summary

Issues:
Entitlement to CENVAT credit on outdoor catering services and rent a cab services provided in the factory for employees.

Analysis:
The High Court considered the appeal against the CESTAT judgment regarding the entitlement of the manufacturer to CENVAT credit on outdoor catering services and rent a cab services provided to factory employees. The Court addressed two separate issues: outdoor catering services and charges for rent a cab services. In a previous case, the Court examined the provision of rent a cab services by an assessee and held that the service constituted an 'input service' under the Cenvat Credit Rules, 2004. The Court emphasized that the service tax paid on such services would be available as CENVAT credit to the assessee. The broad definition of 'input service' encompassed services used directly or indirectly in relation to manufacturing final products, supporting the assessee's claim for credit. The Court dismissed the Tax Appeal on this issue.

Regarding charges for rent a cab services, the Court cited another case where it discussed the provision of canteen services as a statutory requirement under the Factories Act. The Court emphasized that canteen services were indispensable for a manufacturer to run a factory, thus falling within the ambit of 'input service' as defined under the Rules. Rule 3 of the Rules allowed manufacturers to take credit of service tax paid on any input service received, without specifying the nature of the service. The Court upheld the Tribunal's decision that service tax paid on outdoor catering services by the canteen in the manufacturing premises constituted an input service related to business, making CENVAT credit admissible. The Court found the Tribunal's view aligned with the Rules and dismissed the appeal, as there was no legal infirmity warranting interference. Consequently, the Tax Appeal was dismissed by the High Court.