2018 (3) TMI 1003 - AT - Service Tax

CENVAT credit - input services - Catering Charges - Insurance Premium on employees - Insurance charges on Vehicles - Brokerage charges paid for arranging residential premises for employees. Canteen services provided to the patients during the course of clinical test on them - Held that - it has direct nexus with the output services of clinical test service provided by the respondent, accordingly, eligible to credit as the same does not fall in the exclusion clause of the definition of the input services - credit allowed. Insurance Service taken on the employees - Held that - the issue is covered by the judgment in the case of ECOF Industries Pvt Ltd 2011 (2) TMI 1130 - KARNATAKA HIGH COURT , where it was held that the credit on similar issue allowed - credit allowed. Insurance Charges on vehicles - Brokerage charges for arranging accommodation for the employees - Held that - these services are not eligible for credit - credit not allowed. Appeal allowed in part.

Summary

Issues:
1. Denial of Cenvat Credit on service tax paid on input services.
2. Interpretation of Rule 4 of the Service Tax Rules, 1994 regarding centralized billing system.
3. Eligibility of Cenvat Credit on specific input services like catering charges, insurance premium, and brokerage charges.
4. Applicability of judgments in similar cases to determine credit eligibility.

Analysis:
Issue 1: The appeal involved the denial of Cenvat Credit amounting to ?11,13,479 on service tax paid for various input services. The Commissioner (Appeals) upheld the demand, leading to the current appeal by the Revenue.

Issue 2: The respondent's Chartered Accountant argued that the centralized billing system at the Ahmedabad office covered services provided at Mumbai, Nadiad, and Mehsana branches, thus not requiring separate registration for these branches as per Rule 4 of the Service Tax Rules, 1994. The Tribunal found merit in this argument and allowed credit of ?1,56,664 to the respondent.

Issue 3: Regarding specific input services, the appeal addressed the eligibility of Cenvat Credit on catering charges, insurance premiums for employees, insurance charges on vehicles, and brokerage charges for arranging residential premises for employees. The Tribunal accepted the nexus between catering services provided during drug testing and analysis and deemed it an eligible input service. However, credit on insurance charges for vehicles and brokerage charges for accommodation arrangement was deemed ineligible for credit.

Issue 4: The judgment cited precedents like the High Court of Karnataka and the Tribunal to support the eligibility of Cenvat Credit on certain input services. The Tribunal concluded that the credit availed on insurance services for employees was covered by previous judgments, while credit on insurance charges for vehicles and brokerage charges for accommodation was not eligible.

In conclusion, the Tribunal partially allowed the Revenue's appeal, modifying the order to allow credit on specific input services while denying credit on others. The judgment clarified the application of Rule 4 of the Service Tax Rules, 1994 and the interpretation of nexus between input services and output services in determining Cenvat Credit eligibility.