2020 (9) TMI 260 - AT - Service Tax

CENVAT Credit - input services - Short term hotel accommodation - rent-a-cab - outdoor catering - period from April 2015 to March 2016. Short term hotel accommodation - HELD THAT - The crew is necessarily required to seek the required instructions from the Rig Manager which is a pre-requisite for such crew before they assume their duties at the rig. In the absence of such instructions the Appellant s crew would be unable to carry out the designated task in the desired manner. Therefore the Appellant had no choice but to accommodate its crew in such circumstances and when the transportation facility for transporting the crew members was unavailable due to unforeseen circumstances. The said service extended to its personnel by the Appellant would not qualify as a service availed for personal consumption - thus the said service is in relation to and in pursuance of the service being provided by the Appellant and therefore Cenvat credit availed on the same is admissible. Rent-a-cab service - HELD THAT - Tribunal in M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE 2016 (11) TMI 1126 - CESTAT NEW DELHI while considering the amended definition of input service has already decided the matter in favour of the assessee and held that the definition does not provide for total exclusion but only restricts those cases where the vehicles do not qualify as capital goods - From the recipient s point of view motor vehicle can never be capital goods and would never be eligible for credit if a narrow interpretation is given - Cenvat credit on rent a cab is allowed. Outdoor catering service - HELD THAT - Access to proper food is the most basic requirement for any person to carry out a task. It is obvious that if the Appellant s personnel fall ill on account of stale/spoilt food the operation being carried out by the Appellant would be adversely impacted and consequently the output service being provided by the Appellant. The Commissioner (Appeals) ought to have appreciated the facts of the present case wherein the personnel have been deployed on a rig and away from the coastal area. The said personnel do not have access to food other than what is available on the rig and therefore it is apposite in the given circumstances for the Appellant to ensure that its personnel remain healthy - the service availed by the Appellant is in relation to the output service being provided by the Appellant and is therefore admissible for Cenvat credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Correct availing of Cenvat credit on Short term accommodation in hotels
- Correct availing of Cenvat credit on Rent-a-cab service
- Correct availing of Cenvat credit on Outdoor catering service

Short term accommodation in hotels:
The Appellant contended that crew members needed to report one day before duty at offshore locations to receive instructions, often necessitating hotel stays due to unforeseen circumstances like canceled chopper facilities. The Tribunal noted the necessity of crew instructions from the Rig Manager for task execution and the unavailability of transportation. It concluded that the accommodation expenses were related to the output service, making the Cenvat credit admissible.

Rent-a-cab service:
The Appellant justified availing Cenvat credit for hiring vehicles to transport surveyors, naval officers, and inspection agencies for operational requirements in mining services. Referring to a precedent, the Tribunal emphasized that the definition of input service does not exclude cases where vehicles do not qualify as capital goods. Following the precedent's ratio, the Tribunal allowed Cenvat credit for the "rent-a-cab" service.

Outdoor catering service:
The Appellant hired containers to store edible items for personnel deployed on rigs to maintain healthy working conditions. The Tribunal highlighted the importance of proper food access for personnel productivity and the adverse impact of spoiled food on operations. Citing a High Court judgment, it affirmed that "Outdoor Catering" services related to manufacture and delivery processes were eligible for credit. Consequently, the Tribunal deemed the service availed by the Appellant as necessary for the output service, justifying the admissibility of Cenvat credit.

The Tribunal allowed the appeal, emphasizing the nexus between the input services and the output services provided by the Appellant. The judgment referenced specific circumstances and legal precedents to support the admissibility of Cenvat credit for Short term accommodation in hotels, Rent-a-cab service, and Outdoor catering service. The decision was pronounced on 28/07/2020.