2024 (6) TMI 1109 - HC - Central Excise

Input service or not - Rent-a-Cab services - Outdoor Catering services - Club or Association services - CENVAT Credit on Service tax paid (though on its own volition without providing any output service and without any authority of law). Whether in the facts and circumstances of the case, the respondent assessee is entitled to avail credit on services i.e. Rent-a-Cab services, Outdoor Catering services and Club or Association services which have been specifically excluded from the definition of input services as defined under Rule 2 (l) of Cenvat Credit Rules, 2004, w.e.f. 01.07.2012? - HELD THAT - Admittedly there is no material on record to show that these services were utilised for personal consumption to deny credit. Respondent/Assessee is a company and therefore issue of personal consumption does not arise. These expenses are admittedly incurred for its employees who are working for the respondent/assessee in the course of its business to render output services - Whether any service is used for personal consumption or not is certainly question of fact. Furthermore, on other services, the appellant / revenue has not disputed this position. In view thereof, this being question of fact, no substantial question of law arises from the impugned order of the Tribunal. Whether in the facts and circumstances of the case, the CESTAT was right in holding that because the respondent assessee has paid the Service tax (though on its own volition without providing any output service and without any authority of law), such a payment of service tax will entitle them to take cenvat credit of the service paid on input service? - HELD THAT - Respondent / Assessee discharges service tax liability on various amount collected from sale of time slot, subscription charges etc. before remitting the money to Singapore. Respondent / Assessee takes input tax credit on the aforesaid service tax paid and same has been accepted and admitted by appellant / revenue. Appellant / Revenue has also admitted that respondent/assessee is entitled to input tax credit of the said service tax liability paid - The Tribunal has given a finding that appellant / revenue has not disputed that the provider of broadcasting service is entitled to CENVAT credit of the service tax paid on specified services - the contention of appellant / revenue that respondent / assessee does not have the physical establishment for rendering the Broadcasting service is misconceived since the retrospective amendment itself deems that respondent / assessee has having rendered broadcasting services. Even if the contention as raised by appellant / revenue is to be accepted then they would be required to refund the CENVAT credit which they propose to disallow since there is no dispute that the said CENVAT credit is taken on input services and the services on which the service tax has been discharged were exported. Therefore the effect of denial of credit would be that the appellant / revenue will have to refund the said credit amount resulting into whole exercise being tax neutral. Thus, no substantial question of law arises in as much as on account of retrospective amendment, respondent/assessee is deemed to have rendered the broadcasting services and in the alternative based on the admission of appellant /revenue, the amount of input tax credit of which is taken has been collected without any authority of law and therefore would be required to be refunded. Since no substantial question of law arises from the impugned order, the present appeal is dismissed.

Summary

Issues Involved:
1. Interpretation of the definition of "input service" under Rule 2(l)(i) of Cenvat Credit Rules, 2004.
2. Entitlement to avail credit on excluded services under Rule 2(l) of Cenvat Credit Rules, 2004.
3. Claiming Cenvat credit for service tax paid without providing output service.
4. Validity of the order passed by the Customs, Excise & Service Tax Appellate Tribunal (Tribunal).

Issue 1: Interpretation of "input service" under Cenvat Credit Rules, 2004
The appellant/revenue challenged the Tribunal's decision allowing the respondent/assessee to claim Cenvat credit on input services used for broadcasting service. The Tribunal found that the respondent/assessee, being a company, incurred expenses for its employees to render output services, not for personal consumption. The Tribunal held that as the appellant/revenue did not dispute this position, no substantial question of law arose regarding the usage of services for personal consumption.

Issue 2: Entitlement to credit on excluded services
The appellant/revenue contested the respondent/assessee's entitlement to credit on services like Rent-a-Cab, Outdoor Catering, and Club or Association services, excluded from the definition of "input services." The Tribunal noted that no evidence showed these services were used for personal consumption. As the appellant/revenue did not dispute this fact, the Tribunal found no substantial question of law regarding the denial of credit on these services.

Issue 3: Claiming Cenvat credit for service tax paid without output service
The appellant/revenue questioned the respondent/assessee's right to claim Cenvat credit for service tax paid without providing output service. The Tribunal found that the respondent/assessee, as an agent of a Singapore company, exported services and paid service tax on collected amounts. The appellant/revenue admitted the respondent/assessee's entitlement to input tax credit but denied set-off due to lack of infrastructure for broadcasting services. The Tribunal held that no substantial question of law arose as the appellant/revenue admitted the service tax payment without authority of law, requiring a refund.

Issue 4: Validity of the Tribunal's order
The appellant/revenue challenged the Tribunal's order allowing Cenvat credit for input services used in broadcasting. The High Court upheld the Tribunal's decision, emphasizing the retrospective amendment deeming the respondent/assessee to have rendered broadcasting services. The Court also noted that denying credit would result in a tax-neutral scenario, as the service tax was paid without legal authority. Consequently, the Court dismissed the appeal, finding no substantial question of law in the Tribunal's order.

This detailed analysis covers the interpretation of the legal issues in the judgment, highlighting the key arguments and findings in each aspect of the case.