2020 (2) TMI 107 - AT - Service Tax

CENVAT credit - input services - Tour Operator Service used for pick-up and drop of employees of the Appellant to and fro Andheri and Kurla to their office premises - HELD THAT - The issue about the interpretation of amended Rule 2(l) qua rent-a-cab service came up for consideration before the Principal Bench of the Tribunal in the matter of M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE 2016 (11) TMI 1126 - CESTAT NEW DELHI where the Tribunal held that the Appellant therein are entitled to the service tax paid on the said service. The appellants are entitled for the Cenvat credit for rent a cab/ Tour Operator Service even for the period 2011-12 also - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Whether Cenvat credit of service tax paid on "Tour Operator Service" used for pick-up and drop of employees is admissible as 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004.

Analysis:

1. Cenvat Credit Availed Prior to 1-4-2011:
The Tribunal emphasized that the definition of 'input services' under Rule 2(l) of Cenvat Credit Rules, 2004 had a broad scope, including services related to business activities. It was established that the Tour Operator Service was utilized for transporting employees to ensure timely arrival at the workplace, enhancing efficiency in providing output services. The Tribunal noted that Rent-a-Cab/Tour Operator service was considered an input service before 1.4.2011, as it was an essential business expense for efficient operations. The Tribunal rejected the Revenue's argument that input services lacked a direct nexus with the Appellant's business activities.

2. Limitation for Period up to March 2011:
Regarding the limitation for the period up to March 2011, the Tribunal observed that the Appellant regularly submitted Cenvat Account details and ST-3 Returns to the department, with no objections raised during audits. The Tribunal cited a relevant High Court decision, highlighting the necessity of fraud, collusion, or suppression for invoking the extended period. As no such elements were evident, the demand for the period up to March 2011 was deemed unsustainable due to limitation.

3. Cenvat Credit Availed for 2011-12:
Post 1.4.2011, the Tribunal analyzed the exclusion of Tour Operator/Rent-a-Cab services from the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004. The Revenue contended that since the Appellant was a service recipient and not a provider of these services, they were ineligible for credit. However, the Tribunal referred to a precedent where it was held that the Appellant was entitled to the service tax paid on such services, emphasizing that the exclusion clause should be interpreted concerning the service provider, not the recipient. Consequently, the Tribunal allowed the Appellant's appeal for the Cenvat credit on Tour Operator Service/Rent-a-Cab service even for the period 2011-12.

In conclusion, the Tribunal allowed the Appellant's appeal, permitting the Cenvat credit for Tour Operator Service for both the period before and after 1.4.2011, based on the nexus with business activities and the interpretation of relevant legal provisions.