2013 (12) TMI 329 - AT - Service Tax

Non-availability of CENVAT credit - Rent-a-Cab Service - eligibility of CENVAT credit of service tax paid on Outdoor Catering Service - Held that - As far as outdoor catering service is concerned, there is no law laid down anywhere that such service will be in relation to manufacture only if the number of employees is more than 250 - The ratio of the decisions quoted by the Respondent cannot be understood to mean that catering will qualify as input service only if number of employees is more than 250. The effect of providing canteen within the factory is same whether the number of employees is more than 250 or less than 250. I am satisfied that providing catering services in the factory premises will improve their manufacturing efficiency - Following decision of CCE, Delhi-III Vs. Suzuki Powertrain India Ltd. 2010 (4) TMI 742 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of CENVAT credit on 'Rent-a-Cab Service'.
2. Eligibility of CENVAT credit on 'Outdoor Catering Service'.

Analysis:

Issue 1: Eligibility of CENVAT credit on 'Rent-a-Cab Service'
The appeals under consideration involved challenges to the decision of non-availability of CENVAT credit on 'Rent-a-Cab Service' availed by the appellants. The learned counsel argued that the issue is no longer res integra and is covered by various decisions, including a decision by the Hon'ble High Court of Karnataka. The High Court held that services availed for workers to reach factory premises in time have a direct bearing on manufacturing activity, making CENVAT credit available. Following this precedent, Appeals No. 1651, 1653, and 1654/2011 were allowed with consequential relief to the appellants.

Issue 2: Eligibility of CENVAT credit on 'Outdoor Catering Service'
In Appeal No. 1652/2011, the issue was the eligibility of CENVAT credit on 'Outdoor Catering Service'. The respondent argued that if the number of employees is less than 250, there is no statutory obligation to provide such a service, thus making the appellant ineligible for the credit. However, the appellant relied on a decision by the Tribunal which concluded that the number of employees being more than 250 is not a prerequisite for claiming the credit. The Tribunal stated that providing catering services within factory premises enhances manufacturing efficiency, irrespective of the number of employees. Citing this decision, the appellant was deemed eligible for the CENVAT credit. Consequently, the appeal was allowed, along with all impugned orders, granting relief to the appellants.

In conclusion, the judgment by the Appellate Tribunal CESTAT Bangalore addressed the issues of CENVAT credit eligibility on 'Rent-a-Cab Service' and 'Outdoor Catering Service' based on relevant legal precedents and statutory provisions, ultimately allowing the appeals in favor of the appellants.