2017 (10) TMI 351 - AT - Service Tax

CENVAT credit - Rent-a-Cab Service - Travel Agent Service - denial on the ground that it is for personal use of the employees - Held that - the facts of the case which is not in dispute that both the services were used by the employees of the company for the purpose of activity related to the business activity of the bank. As regard the Rent-a-cab service it is used by the employees for meeting with the customers which is a core activity for fetching the business for the appellant. As regard the travel agent service the employees of the appellant have to travel different parts of the country in relation to the business activity of the appellant. For the purpose of traveling the travel agent service for booking the tickets is essential service for conducting the business of the appellant. The issue is relates to the period prior to 1.4.2011 when by amendment in the definition of input service, certain services were excluded - the cenvat credit in respect of Rent-a-cab service and Travel agent service is admissible - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Admissibility of Cenvat Credit on Rent-a-Cab Service.
2. Admissibility of Cenvat Credit on Travel Agent Service.

Detailed Analysis:

1. Admissibility of Cenvat Credit on Rent-a-Cab Service:
The adjudicating authority denied the Cenvat Credit on Rent-a-Cab Service, arguing it was for personal use of employees. However, the appellant contended that Rent-a-Cab services were used for business purposes, such as meetings with customers and employee transportation to business premises, thus qualifying as business expenditure. The tribunal found that the Rent-a-Cab service was indeed used for business activities, such as customer meetings, which are essential for fetching business. The tribunal referenced several precedents, including Stanzen Toyotetsu India (P) Ltd. Vs. Commr. of C.Ex., Bangalore-III and Commissioner of C. Ex., Nasik Vs. Cable Corporation of India Ltd., which upheld that transportation services for employees are considered input services as they indirectly relate to the manufacturing process or business activities. The tribunal concluded that Rent-a-Cab services qualify for Cenvat Credit as they are used in relation to business activities.

2. Admissibility of Cenvat Credit on Travel Agent Service:
The adjudicating authority also denied Cenvat Credit on Travel Agent Service, citing personal use. The appellant argued that travel agent services were used for booking tickets for employee business travel, which is directly related to the provision of output services. The tribunal agreed, noting that employees' travel is essential for conducting business activities. The tribunal cited judgments such as Hindalco Industries Ltd. Vs. Commissioner of Central Excise, Belapur and Sundaram Business Services Ltd. Vs. Commissioner of Service Tax, Chennai-II, which supported the admissibility of Cenvat Credit on travel-related services. The tribunal concluded that Travel Agent services are essential for business activities and thus qualify for Cenvat Credit.

Conclusion:
The tribunal set aside the impugned order and allowed the appeals, affirming that both Rent-a-Cab and Travel Agent services qualify for Cenvat Credit as they are used in relation to business activities. The tribunal emphasized that the issue pertains to a period before the amendment on 1.4.2011, which excluded certain services from the definition of input service. Therefore, there was no bar on allowing credit for the subject services.