2009 (6) TMI 474 - AT - Service Tax

Cenvat Credit- Rent-a cab- The appellant herein engaged in the manufacture of aerated water and are availing Cenvat Credit facility. On scrutiny of the records, it revealed that they had availed Cenvat Credit on the input services i.e., canteen services and rent-a-cab services during the period May, 2006 to March, 2007. Lower authorities entertained a view that the appellant is not eligible for availing the Cenvat Credit on the Service Tax paid on the input services and hence, issue show-cause notice proposing to recover Cenvat Credit. The adjudicating authority after considering the submissions made by the appellant before him confirmed the demand and also imposed penalties. On an appeal, Commissioner (Appeals) also came to the same conclusion and rejected the appeal filed by the appellant. In the light of the decision of CCE v. Cable Corpn. of India Ltd. 2009 19 STT 158 (Mum. - CESTAT) held that order of Commissioner (Appeals) is liable to set aside and appeal is allowed.

Summary

Issues:
Denial of Cenvat Credit on Service Tax paid on input services like canteen services and rent-a-cab services.

Analysis:
The appeal was against the OIA No. 03/2008(H-I) ST, dated 28-5-2008, where the appellant, engaged in the manufacture of aerated water, was denied Cenvat Credit on input services like canteen services and rent-a-cab services for the period May 2006 to March 2007. The lower authorities issued a show-cause notice to recover Cenvat Credit and Education Cess. The adjudicating authority confirmed the demand and imposed penalties, which was upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant's representative argued that the issue was settled in favor of the appellant based on previous tribunal decisions. Specifically, the decision in the case of CCE v. GTC Industries Ltd. covered the issue of Cenvat Credit on canteen services, while the decision in the case of CCE v. Cable Corpn. of India Ltd. covered the issue of rent-a-cab services.

After hearing both sides and examining the records, the Tribunal found that the issue revolved around the denial of Cenvat Credit on Service Tax paid for canteen services and rent-a-cab services. The Tribunal referred to the decision of the Larger Bench in the case of GTC Industries Ltd., emphasizing the interpretation of statutory provisions and the context in which they are issued. The Tribunal highlighted that expenses towards canteen services form part of the cost of production, as per CAS-4, and are necessary for factories with over 250 workers under the Factories Act, making the Service Tax on outdoor catering services admissible for Cenvat Credit. Similarly, the Tribunal noted that the issue of Cenvat Credit on rent-a-cab services was settled in favor of the appellant based on the decision in the case of Cable Corpn. of India Ltd.

Consequently, the Tribunal found the impugned order unsustainable in light of the settled judicial pronouncements on the issues at hand. The Tribunal set aside the impugned order and allowed the appeal with any consequential relief deemed necessary.