2021 (7) TMI 156 - AT - Central Excise

CENVAT Credit - input services - Outdoor Catering Services - Landscape/Gardening Services - HELD THAT - The Hon ble jurisdictional High Court in M/S. ROCA BATHROOM PRODUCTS (P) LTD. VERSUS THE COMMISSIONER OF G.S.T CENTRAL EXCISE, CHENNAI OUTER COMMISSIONERATE 2018 (11) TMI 1446 - CESTAT CHENNAI has ruled in favour of the assessee. The Hon ble jurisdictional High Court has also referred to a decision of the Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS MILLIPORE INDIA (P.) LTD. 2011 (4) TMI 1122 - KARNATAKA HIGH COURT , wherein the Hon ble Court has extracted the definition of input services and the same has been interpreted and it was held that The Environmental law expects the employer to keep the factory without contravening any of those laws. That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof - the credit allowed on gardening services. Catering Services - HELD THAT - Although the above interpretation squarely applies to Catering Services as well, but however, a factual verification as to whether the said services were availed by all the employees or were they provided only to specific employees, is required to be ascertained - this issue alone is sent back to the file of the Adjudicating Authority for the factual verification and if it is found that the service was provided to the employees in general, then no denial is called for. The appeal therefore stands partly allowed and partly remanded on the above terms.

Summary

Issues:
- Availment of CENVAT Credit on Outdoor Catering Services and Landscape/Gardening Services.

Analysis:
1. Factual Background: The appellant, engaged in manufacturing tools, availed CENVAT Credit on Service Tax paid for Outdoor Catering and Landscape Services provided by specific vendors, which the Revenue deemed ineligible.

2. Show Cause Notice: A notice was issued proposing to disallow and demand the allegedly wrongly availed CENVAT Credit. The Adjudicating Authority confirmed the demand, imposed interest, and penalty under relevant rules.

3. Appeals: The appellant appealed before the Commissioner of G.S.T. and Central Excise, who upheld the Adjudicating Authority's decision. Subsequently, the appellant approached the forum for further appeal.

4. Hearing: During the hearing, the appellant's advocate and the Revenue's authorized representative presented arguments regarding the nature of services and eligibility for CENVAT Credit.

5. Legal Precedents: The appellant cited a Tribunal decision and a High Court ruling to support their claim for CENVAT Credit on Landscape/Gardening Services.

6. Contentions: The Departmental Representative argued that the Outdoor Catering charges were personal in nature, catering to specific individuals, warranting disallowance.

7. Decision: The Member (Judicial) referred to the High Court's favorable ruling on Landscape/Gardening Services, emphasizing the broad definition of input services. The judgment highlighted that expenses for maintaining eco-friendly premises qualify as input services, entitling the appellant to claim CENVAT Credit.

8. Verification: The judgment stressed the need for factual verification to determine if the Catering Services were provided to all employees or specific individuals, before denying the credit.

9. Remand: The issue of Catering Services was remanded to the Adjudicating Authority for verification. The penalty was set aside as it was deemed unsustainable due to the disallowance.

10. Operative Part: The appeal was partly allowed and partly remanded for further proceedings based on the above terms.

This detailed analysis encapsulates the essence of the legal judgment regarding the availment of CENVAT Credit on Outdoor Catering Services and Landscape/Gardening Services, highlighting the key arguments, legal precedents, and the decision rendered by the Appellate Tribunal CESTAT CHENNAI.