2018 (8) TMI 618 - AT - Service Tax

CENVAT Credit - input services - Outdoor Catering Services - Works Contract Service - Held that - Though the services are in the nature of works contract, but were not related to construction of building or civil structure or laying of foundation etc. Since the nature of the activities provided by the service providers to the respondent as per the contract and as indicated in the invoices have not been properly scrutinized by the authorities below. The matter should go back to the original authority for proper verification of the invoices / contract to ascertain whether, the works contract services provided by the service provider to the respondent are confirming to exclusion category of service provided under the definition of input service - appeal allowed by way of remand.

Summary

Issues involved: Appeal against the interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 for 'Outdoor Catering Services' and 'Works Contract Service'.

Analysis:
1. The Revenue appealed against the order passed by the Commissioner of CGST and Central Excise (Appeals-III), Mumbai, contending that the Cenvat benefit for 'Outdoor Catering Services' and 'Works Contract Service' was wrongly allowed. The Revenue argued that the amended definition of input service from 01.04.2011 excluded these services from Cenvat benefits.

2. The Revenue's arguments were supported by the Departmental Representative (D.R.), who cited the Larger Bench decision in the case of M/s Wipro Ltd. vs CCE, Bangalore, stating that the CENVAT benefit for 'Outdoor Catering Services' should not be available due to the exclusion clause in the definition of input service.

3. The respondent's consultant argued that the services received were related to works contract services and that the Cenvat benefit for works contract services was rightfully allowed by the Commissioner (Appeals). The consultant contended that the services were not related to the construction or execution of works contract of buildings or civil structures, citing specific invoices from service providers like M/s Hewlett Packard Enterprise India Pvt. Ltd. and others.

4. After hearing both sides and examining the case records, it was noted that the definition of input service was amended in 2011, bringing certain excluded services under its purview, thereby restricting Cenvat benefits. The exclusion category included services related to works contracts used for construction purposes.

5. Referring to the decision of the Larger Bench in the Wipro Ltd. case, it was established that outdoor catering services fell under the exclusion clause of the amended definition of input service. Consequently, the Cenvat benefit for outdoor catering services was disallowed, and the appeal was allowed in favor of Revenue.

6. Regarding works contract services, it was observed that while the services were in the nature of works contracts, they were not directly related to the construction of buildings or civil structures. As the nature of activities provided by the service providers was not thoroughly scrutinized by the lower authorities, the matter was remanded back for proper verification of invoices and contracts to determine if the works contract services fell within the exclusion category under the definition of input service.

7. The appeal was disposed of with the decision to set aside the Cenvat benefit for outdoor catering services while remanding the matter concerning works contract services for further adjudication based on proper verification of the nature of services provided by the service providers.