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2022 (9) TMI 128 - AT - Service TaxCENVAT Credit - input service - outdoor catering services - period 2012-13, from 01.07.2012 to 2017-18 upto June 2018 - time limitation - HELD THAT - As per the exclusion clause, it is very clear that services in relation to outdoor category have been excluded from the definition of input service. These services have been used for the personal use or consumption of the employee of the appellant. Cenvat credit scheme is a beneficial piece of legislation which allows for tariff in respect of the taxes paid on the input service and capital goods used by the manufacturer/service provider to be utilised for payment of central excise duty or service tax in respect of the goods manufactured and cleared for that output services provided - The definition of input services specifically excludes the outdoor catering services from the purview of the scheme. The argument that this service has been provided as per the Maharashtra Shops and Establishments (Regulation of Employment Conditions of Service) Act, 2017 cannot be sustained in view of the specific exclusion provided by the definition incorporated in the scheme. This issue came for consideration of Hon ble High Court of Karnataka in the case of Toyota Kirolsaka Motor Pvt Ltd 2021 (5) TMI 880 - KARNATAKA HIGH COURT where it was held that There is no ambiguity in the statute and therefore, as it is a taxing statute, this Court cannot add or substitute words in the statutory provisions while interpreting the statutory provision. The statute does not leave any room for any other interpretation and therefore, in the considered opinion of this Court, the judgment does not help the appellant in any manner. In view of the express provision of Rule 2 (l) defining the input services to exclude the outdoor catering services, and the decision of larger bench of tribunal in case of Wipro Ltd., referred above the decision rendered by the Single Member Bench in case of M/S HAWKINS COOKERS LIMITED VERSUS COMMISSIONER OF CGST, THANE 2021 (3) TMI 789 - CESTAT MUMBAI is per incurriam and cannot be relied upon as binding precedence. The view expressed in the case of Wipro Ltd., has been approved by the Hon ble High Court of Karnataka, Hon ble High Court of Bombay and Hon ble Supreme Court. Time Limitation - HELD THAT - The issue of limitation is the question of fact based on the existence of the ingredients provided by Section 73 of Finance Act, 1994 for invoking the extended period of limitation. The facts which were in the knowledge of the appellant but not disclosed at any time to the Revenue would be a suppression of fact with intention to evade payment of service tax. I am very clear in my mind that the demand made invoking extended period of time can be sustained. Even otherwise in the present case the appellant has deposited this amount on 03.07.2018 and the show cause notice was issued on 18.07.2018. It is also noted on being pointed out by the audit, the appellant has deposited the entire amount of the tax due along with the interest under protest. The amounts paid have been appropriated by the order-in-original against the demand. As the entire amounts along with interest have been paid prior to issuance of the show cause notice, in view of the Explanation 2 to the sub section (3), there are no merit in the penalty imposed on the appellant under section 78 and set aside the same. Appeal is partly allowed to the extent of setting aside the penalty imposed under Section 78 of the Finance Act, 1994.
Issues Involved:
1. Disallowance of Cenvat credit on outdoor catering services. 2. Recovery of interest on the disallowed Cenvat credit. 3. Imposition of penalty under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. 4. Invocation of the extended period of limitation for demand. Issue-wise Detailed Analysis: 1. Disallowance of Cenvat Credit on Outdoor Catering Services: The appellant, a provider of various services, availed Cenvat credit on outdoor catering services, which was disallowed by the Commissioner (Appeals). The appellant argued that providing canteen facilities was a statutory obligation under the Maharashtra Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2017. They cited the Tribunal's decision in the case of Hawkins Cookers and the Hon'ble Madras High Court's decision in Ganesan Builder Ltd. to support their claim. However, the Commissioner (Appeals) and the Tribunal referred to Rule 2(l) of the Cenvat Credit Rules, 2004, which explicitly excludes outdoor catering services from the definition of 'input service' when used primarily for personal use or consumption by employees. The Tribunal also cited the Larger Bench decision in Wipro Ltd., which held that post-01.04.2011, outdoor catering services are excluded from Cenvat credit. The Hon'ble High Court of Karnataka in Toyota Kirloskar Motor Pvt. Ltd. and the Hon'ble Supreme Court upheld this exclusion, emphasizing strict interpretation of the statutory provisions. 2. Recovery of Interest on the Disallowed Cenvat Credit: The Commissioner (Appeals) upheld the recovery of interest on the disallowed Cenvat credit under Rule 14(ii) of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. The Tribunal found that since the demand for disallowance of Cenvat credit was sustained, the recovery of interest was also justified. 3. Imposition of Penalty under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994: The Commissioner (Appeals) imposed a penalty equivalent to the disallowed Cenvat credit amount. The appellant contended that there was no mens rea to evade taxes and no suppression of facts. However, the Tribunal noted that the appellant had not disclosed the availing of Cenvat credit on outdoor catering services to the department, constituting suppression of facts. Despite this, the Tribunal set aside the penalty under Section 78, considering that the appellant had paid the entire amount of tax along with interest before the issuance of the show cause notice. The Tribunal referred to Explanation 2 to Section 73(3) of the Finance Act, 1994, which provides that no penalty shall be imposed if the service tax and interest are paid before the issuance of the show cause notice. 4. Invocation of the Extended Period of Limitation for Demand: The Tribunal upheld the invocation of the extended period of limitation, as the appellant had suppressed the fact of availing Cenvat credit on excluded services. The Tribunal emphasized that the facts known to the appellant but not disclosed to the Revenue constituted suppression with intent to evade payment of service tax. The Tribunal also noted that the appellant had paid the amount under protest and the show cause notice was issued within less than a month, making the demand within the permissible period. Conclusion: The Tribunal partly allowed the appeal by setting aside the penalty imposed under Section 78 of the Finance Act, 1994, while upholding the disallowance of Cenvat credit, recovery of interest, and invocation of the extended period of limitation. The decision emphasized strict adherence to the statutory provisions and the exclusion of outdoor catering services from the definition of 'input service' post-01.04.2011.
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