2019 (5) TMI 2027 - AT - Service Tax

CENVAT credit - denial on account that the input services have no nexus with the output service provided by the appellant - Event Management and Mandap Keeper Service - General Insurance and Insurance Auxiliary Service - Catering Service - GTA Service - HELD THAT - The term input service defined under Rule 2(l) of the Cenvat Credit Rules 2004 takes within its ambit the services used by the provider of output service for providing such output service. It is an admitted position that the appellant is a provider of defined output service under the Finance Act 1994. On perusal of records it is found that the disputed service in question were used/utilized by the appellant in or in relation to providing the output service. Thus the case of the appellant squarely falls under the definition of input service for the purpose of availment of Cenvat Credit. Considering the fact that the appellant is not contesting disallowance of Cenvat Credit on catering service the impugned order should sustain on the ground of denial of Cenvat benefit on such service. Since it is not specifically alleged that the credit taken has been utilized by the appellant for payment of service tax on the output service and that substantial turnover of the appellant is in context with export of service which is not liable to service tax the interest and penalty confirmed against the appellant cannot be sustained. Conclusion - The impugned order is set aside to the extent it has confirmed the Cenvat demand on the taxable services namely Event Management Mandap Keeper Service General Insurance Insurance Auxiliary Service and GTA Service and the appeal is allowed in favour of the appellant. The impugned order sustains so far as it denied the Cenvat Credit on catering service. However interest and penalty confirmed on such service is set aside. Appeal allowed in part.

Summary

The appeal before the Appellate Tribunal CESTAT Mumbai concerned the denial of Cenvat Credit to an appellant engaged in Information Technology Software Services during the period of 2013-15 and 2014-15. The authorities had disallowed the Cenvat benefit on services such as Event Management and Mandap Keeper Service, General Insurance and Insurance Auxiliary Service, Catering Service, and GTA Service, citing a lack of nexus with the output service provided by the appellant.The appellant argued that the services in question were indeed used for providing the output service and relied on various tribunal decisions to support their claim. The appellant did not contest the disallowance of Cenvat Credit on catering service but sought to set aside the interest and penalty imposed. The Authorized Representative for the respondent supported the findings of the impugned order.The Tribunal analyzed the definition of "input service" under the Cenvat Credit Rules, 2004, which includes services used by the provider of output service for providing such service. It found that the disputed services were used by the appellant in relation to providing the output service, thus falling under the definition of input service for Cenvat Credit availment. The Tribunal noted that a Co-ordinate Bench had allowed Cenvat benefit on the disputed services. However, considering the appellant's non-contestation of the disallowance of Cenvat Credit on catering service and the lack of specific allegations regarding the utilization of the credit for service tax payment on the output service, the Tribunal upheld the denial of Cenvat benefit on catering service. The Tribunal also considered the substantial turnover of the appellant related to the export of services not liable to service tax, leading to the setting aside of interest and penalty confirmed against the appellant.As a result, the impugned order was set aside concerning the denial of Cenvat Credit on Event Management & Mandap Keeper Service, General Insurance & Insurance Auxiliary Service, and GTA Service, with the appeal allowed in favor of the appellant on these grounds. However, the impugned order was sustained regarding the denial of Cenvat Credit on catering service, with the interest and penalty confirmed on such service set aside.In conclusion, the appeal was partly allowed in favor of the appellant, with the Tribunal issuing its order on May 30, 2019.