2014 (9) TMI 645 - AT - Service Tax

Benefit of credit of service tax - outdoor catering services - Held that - admittedly outdoor catering services stand excluded from the definition of input services w.e.f. 01/04/11. The appellant had stopped availing the credit when such services were being provided to their regular employees. However, they have taken the credit in respect of the service tax paid on the outdoor catering services being provided by them to the contract labour. Appellant would become entitled to the service tax paid on the outdoor catering services even in respect of their regular employees in as much as it is also their statutory duty to provide outdoor catering services to their regular employees. However, we find that the dispute only relates to the such services being provided to the contract employees. We further find that there is no such differentiation made in the said exclusion clause in respect of the regular employees or the contract employees - appellant have also not pleaded any financial hardship - Partial stay granted.

Summary

Issues involved:
- Availing credit of service tax on outdoor catering services
- Interpretation of the exclusion clause in the definition of input services
- Financial hardship plea

Analysis:

1. Availing credit of service tax on outdoor catering services:
The appellants were availing the benefit of credit of service tax paid on outdoor catering services provided to their employees. The Commissioner dropped the demand for the period prior to 01/04/11 but confirmed it for the period from 01/04/11 onwards. The appellant argued that they stopped availing the credit for services provided to regular employees from 01/04/11 due to an amendment excluding such services. However, they continued to avail the credit for services provided to contract labor as they were under a statutory obligation to provide catering services to them. The Tribunal noted that the dispute only related to services provided to contract employees, finding no differentiation in the exclusion clause between regular and contract employees.

2. Interpretation of the exclusion clause in the definition of input services:
The learned advocate for the appellant argued that the exclusion clause in the definition of input services related to outdoor catering services primarily used for personal use or consumption of any employee. He contended that as the appellant was under a statutory obligation to provide catering services to contract labor, they were entitled to the credit for such services. However, the learned DR countered that the exclusion applied to all employees, regardless of statutory obligations. The Tribunal found that outdoor catering services were excluded from the definition of input services from 01/04/11, and the appellant's interpretation did not align with the clause's wording.

3. Financial hardship plea:
The appellant did not plead financial hardship. Therefore, the Tribunal directed the appellant to deposit a specified amount within a set period, allowing waiver of the balance amount of duty demand and the entire penalty and interest during the appeal's pendency. Compliance was scheduled for a specific date to ensure adherence to the directive.