2019 (12) TMI 64 - AT - Service Tax

CENVAT Credit - input services - Membership of Club or Association service - Convention services - credit rejected alleging that the services are primarily for personal use or consumption of their employees and are nothing but staff welfare activities - HELD THAT - The appellant has taken membership in NASSCOM, American Chamber of Commerce and International Market Assessment India (P) Ltd. and paid charges for such membership which is actually expenses incurred by the company for being a member in such associations - as the membership helps the company to be updated with regard to market trends and also help them in augmenting their business, it cannot be said that the membership acquired by the company is for the personal use of the employees - Credit allowed. Convention services - HELD THAT - The event that was conducted for a training programme for designing and installing automatic sprinkler systems. Thus the event is not for personal consumption of employees or food or beverages consumed by them. It is for conduct of event of training. The said service cannot be said to be an activity involving personal use or consumption of the employees - The event management service cannot fall under Out Door Catering Service and thus will not stand excluded from the definition of input services - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of cenvat credit on Membership of Club or Association service and Convention services.

Analysis:

1. Club or Association Services:
The appellants were engaged in providing BPO services and were registered with the department. The issue revolved around the disallowance of cenvat credit on membership of certain associations like NASSCOM and American Chamber of Commerce. The Ld. Consultant argued that the memberships were acquired for business purposes, not personal use, to stay updated with market trends and agitate grievances. Citing a Tribunal decision, the Consultant successfully contended that the disallowance was unjustified. The Member (Judicial) agreed, setting aside the disallowance of credit on club or association services.

2. Event Management Services:
The second issue concerned the disallowance of credit on Event Management Services, specifically related to conducting training for the appellant-company's staff. The Ld. Consultant highlighted that the training was conducted for professional development, not personal consumption of employees. Referring to a previous decision, the Consultant argued that such services should not be considered as involving personal use or consumption. The Member (Judicial) concurred, finding that the event was for training purposes and not personal consumption, thus setting aside the disallowance of credit on event management services.

In conclusion, the impugned order disallowing credit on Club or Association Services and Event Management Services was set aside, and the appeal was allowed with consequential reliefs as per law.