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2015 (3) TMI 560 - AT - Service TaxDisallowance of CENVAT Credit - Outdoor Catering service - Held that - It has not been held by the Hon ble Bombay High Court in the case of Ultra Tech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT that outdoor catering service is allowable only in the case of more than 250 workers, as it was mandatorily required under the provisions of the Factories Act, 1948 for providing canteen services. It shows that the legislation appreciates the need of canteen service for the workers at the place of work. Only to avoid the hardship for an essential need, the legislation have provided, that atleast in factories having employees more than 250, should provide, that does not mean that the service was not required for any industrial service or organization having less than 250 workers. Even the employees of a smaller organization having less than 250 workers will also be hungry and required to be provided with canteen facility for the employees. Therefore, I hold that the ruling in the case of IFB Factories Ltd. (2013 (1) TMI 503 - CESTAT BANGALORE) per incuriam, as the provisions of Factories Act, have been wrongly interpreted, with respect to the provisions of input service. In view of my findings, I hold that the Respondent-assessee is entitled to Cenvat Credit in respect of outdoor catering service - Decided against Revenue.
Issues:
- Appeal against disallowance of CENVAT credit for outdoor catering service - Interpretation of input service in relation to business operations - Application of rulings in similar cases - Admissibility of CENVAT credit for outdoor catering service Analysis: 1. The appeal was filed by the Revenue against the Order-in-Appeal allowing CENVAT credit for outdoor catering service. The appellant, a service provider under banking and financial services, faced a show cause notice for allegedly wrongly availing CENVAT credit for outdoor catering services. The Order-in-Original disallowed the claim as the outdoor catering was considered a fringe benefit and not an input service. However, the Commissioner (Appeals) allowed the appeal based on precedents like the Ultratech Cement case and the Hindustan Coca Cola Beverages case, emphasizing the integral connection of the service with manufacturing costs and the lack of evidence showing the workers bore the service tax burden. 2. The Revenue contended that the reliance on the Ultratech Cement case was misplaced, arguing that the canteen facilities were provided due to statutory obligations under the Factories Act, which was not the case in the appellant's situation. The respondent's counsel argued that outdoor catering services were essential for employee productivity, citing the Heartlan Bangalore Transcription case and the GTC Industries case, where similar services were considered essential input services for business operations. 3. The Revenue further relied on the Gujarat Heavy Chemicals case, emphasizing the lack of direct relation to manufacturing activities for certain services. Additionally, the IFB Industries case was cited to highlight the inadmissibility of service tax for outdoor catering services when the workforce was less than 250 employees. Ultimately, the Tribunal found that the legislation recognized the need for canteen services, irrespective of the number of employees, and ruled in favor of the respondent, allowing CENVAT credit for outdoor catering services. 4. The judgment clarified that the number of workers did not determine the eligibility of outdoor catering services for CENVAT credit, as the need for such services was essential regardless of the workforce size. The ruling in the IFB Factories case was deemed erroneous in its interpretation of the Factories Act provisions concerning input services. Consequently, the respondent was held entitled to CENVAT credit for outdoor catering services, leading to the dismissal of the Revenue's appeal.
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