2021 (8) TMI 716 - AT - Service Tax

CENVAT Credit - Works Contract Service - Quiz Competition - denial of credit on the ground that the CENVAT credit pertains to execution of Works Contract Service in respect of the building/civil structure occupied by the appellant, which is excludable from the purview of Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT - The Works Contract Service involved in the present case falling under the definition of Input Service because services availed by the appellant pertains to only repair, renovation and maintenance of the office of the appellant which is on a leased premises and such renovation, repair is required for providing the output service of the appellant and they have not been specifically excluded under Rule 2(l) of the CENVAT Credit Rules, 2004 because they do not pertains to construction or execution of works contract of building or civil structure. It has been consistently held in various decisions that repair and maintenance of the office premises falling under the definition of Input Service and the assessee is entitle to avail credit of the same - Moreover, Circular No.943/4/2011 dated 29.04.2011 also clarified that the CENVAT credit of input service used for repair or maintenance of the factory is allowed, hence denial of CENVAT credit on works contract is not sustainable. CENVAT Credit - conducing quiz competition - HELD THAT - The CENVAT credit on these re- creational activities cannot be allowed. CENVAT credit on Works Contract Service is allowed and CENVAT credit of service tax paid on conducting of quiz competition is denied - appeal allowed in part.

Summary

Issues:
Appeal against rejection of CENVAT credit on certain services and improper documents.

Detailed Analysis:

1. Issue of CENVAT Credit Rejection:
The appellant appealed against the rejection of CENVAT credit on Works Contract Service and service tax paid on Quiz Competition. The appellant argued that the renovation and maintenance services of the office premises are essential for providing output services, falling within the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004. The appellant cited various decisions supporting the allowance of CENVAT credit for repair and renovation services. Additionally, Circular No.943/4/2011 clarified that input services used for repair or renovation are eligible for credit. The Tribunal found that the renovation and repair services were necessary for providing output services and were not excluded under Rule 2(l) of the CENVAT Credit Rules, 2004. The Tribunal relied on previous decisions and the circular to allow the CENVAT credit on Works Contract Service.

2. Limitation Issue and Quiz Competition Service Tax Credit:
The appellant also contended that part of the demand was barred by limitation. However, the Tribunal did not address this issue explicitly in the judgment. Regarding the service tax paid on conducting a quiz competition, the appellant argued that it was part of team-building efforts to enhance morale and team spirit. The Tribunal, however, denied the CENVAT credit for service tax on conducting quiz competitions, stating that it was not inclined to allow credit for recreational activities.

3. Final Decision:
After considering the arguments from both parties and examining the records, the Tribunal partially allowed the appeal. It allowed the CENVAT credit on Works Contract Service as the renovation and repair services were deemed essential for providing output services. However, the credit for service tax paid on conducting quiz competitions was denied. The Tribunal's decision was based on the interpretation of the CENVAT Credit Rules, previous decisions, and the specific nature of the services provided by the appellant.

In conclusion, the Tribunal's judgment addressed the issues of CENVAT credit rejection, limitation, and service tax credit for quiz competitions, providing a detailed analysis of the arguments presented by both parties and the legal framework governing the CENVAT credit eligibility.