2015 (10) TMI 2463 - AT - Service Tax

Availment of CENVAT Credit - outdoor catering and guest house maintenance service - services are neither directly or indirectly used in or in relation to the manufacture or clearance of final products - Held that - After amendment of the definition of input service with effect from 1.4.2011 the exclusion part of the definition takes in outdoor catering service also. But it is provided therein that the exclusion applies when such services are used primarily for personal use or consumption of any employees. The outdoor catering service/canteen services provided by the appellant is in compliance of mandatory requirement under section 46 of the Factories Act, 1948. The ground stated in the impugned order for disallowing the credit is that even though canteen facility is provided under the Factories Act, to the workers under statutory obligation, it does not have nexus either directly or indirectly to manufacture of final product. Prior to the amendment of input service with effect from 1.4.2011 the definition of input service was very wide so as to include all activities that would come under the activities of business of manufacture. Annexure B shows that all invoices except 2 pertain to the period prior to 1.4.2011. These two invoices are dated 18.4.2011 and 18.5.2011. In a number of judgements, the CESTAT has held that guest house maintenance service and outdoor catering service in the guest house are eligible for credit. - appellant is eligible for credit on guest house maintenance services for the period from January, 2008 to December, 2011 except for the two invoices. Appellants are entitled to credit on outdoor catering services and guest house maintenance services. - Decided partly in favour of assessee.

Summary

Issues:
Challenging denial of credit on outdoor catering services and guest house maintenance services.

Analysis:

1. Outdoor Catering Services for the Period September 2011 to August 2012:
- The appellants, engaged in manufacturing aerated and mineral water, were denied credit on outdoor catering services for not being directly or indirectly related to their manufacturing activities.
- Arguments presented included the necessity of canteen services under the Factories Act, 1948, and the essential role of such services in the manufacturing process.
- Citing various judgments, including CCE vs. Ultratech Cement Ltd., the appellant argued that services like outdoor catering are integral to manufacturing activities and should qualify as input services.
- The Tribunal agreed with the appellant's contentions, emphasizing the statutory obligation under the Factories Act and the nexus between catering services and manufacturing activities.

2. Guest House Maintenance Services and Outdoor Catering for the Period January 2008 to December 2011:
- The denial of credit for guest house maintenance and catering services in the guest house was challenged for the specified period.
- Pre-amendment of input service definition, the scope was broader, including activities related to the business of manufacture.
- Relying on precedent cases like L'oreal India Pvt. Ltd. vs. CCE, Pune-I, the appellant contended that these services qualify as input services eligible for credit.
- The Tribunal upheld the appellant's claim, except for two specific invoices, based on the precedent and the wider definition of input services before the amendment.

3. Conclusion:
- The Tribunal allowed the appeals related to outdoor catering services and guest house maintenance services, emphasizing the statutory compliance under the Factories Act and the integral connection of these services to manufacturing activities.
- The judgment highlighted the importance of statutory obligations and the essential role of services like catering and maintenance in the manufacturing process.
- The decision was based on legal precedents and the broader interpretation of input services before the relevant amendment.