2016 (12) TMI 812 - AT - Service Tax

100% EOU and STP - CENVAT credit - denied on account of nexus and lack of documents - Movement of personnel baggage service - Association / Membership Fees - Event Management Service - Manpower Recruitment or Supply Agency Service / Management Consultancy Service - Management, Maintenance or Repair Service - Air Travel Agent s Service - ineligible services - Traffic Control services - Procedural Non-compliance - Difference of credit as per statement submitted and ST-3 filed. Movement of personal baggage service - Held that - During the employment, employees move from one location of the company to another or to customer site, where movement of their baggage become necessary to render services and therefore all the services are an activity relating to business and is covered under the definition of input service - the appellant is entitled to avail CENVAT credit on movement of personal baggage. Association and Membership Fee - Held that - the expenses incurred by the company towards Association and Membership charges do not have any nexus with the output service rendered by the assessee as the said service is made available to the Members mainly for the purpose of entertainment, amusement and relaxation - credit not allowed. Event Management service - Held that - the learned counsel for the appellant submitted that the company has to incur expenses for events such as Technical Day Functions, Value Events, Bosch Annual Day which are organized for the development of employee and which results in betterment of individual performance. In reply to this, the learned AR submitted that impugned order has observed that the company has spent on organizing seminars, social functions, birthday parties, anniversaries and other functions which have no nexus with the output service - In view of the contradictory stand taken by both the parties, I hold that the original authority will verify each service under the category of Event Management before allowing the CENVAT Credit - matter on remand. Credential Verification of employees - Held that - in order to ensure that the credentials of the employee s background are adequately verified, background check becomes critical and part of the employee recruitment process. In view of this, I hold that this activity is relating to business and is covered under the definition of input service - credit allowed. Air Transport Service - Held that - the employees of the company have to travel to various places in order to perform the job of the company and it has a direct nexus with regard to output service rendered by the assessee - Air Transport is an input service - appeal allowed. Ineligible services - The learned consultant did not press for this amount as he was unable to justify the same. Similarly the learned consultant did not press for input CENVAT credit on AMC for dish washer and traffic control procedure on account of lack of documents - credit disallowed. Denial of CENVAT credit on account of difference of credit as per statements submitted and the ST-3 returns filed by the assessee - Held that - I hold that this will be verified by the original authority regarding its correctness and accordingly the original authority will decide as to how much the appellant is entitled to avail CENVAT credit - matter on remand. Appeal partly allowed - matter on remand.

Summary

Issues Involved:
Appeal against denial of CENVAT credit on certain input services due to lack of nexus and documents.

Analysis:

1. Movement of Personal Baggage:
The appellant claimed CENVAT credit on this service, arguing that it is essential for the business activity as employees move between locations to render services. The appellant cited previous orders where similar credits were allowed. The judge agreed, stating that the movement of personal baggage is integral to the business and falls under the definition of an input service.

2. Association and Membership Fee:
The denial of CENVAT credit on this service was contested by the appellant, claiming it was related to trade associations and chambers of commerce. However, the Department argued that these expenses lacked nexus with the output service and were mainly for entertainment purposes. The judge sided with the Department, denying the credit for association and membership fees.

3. Event Management:
The appellant justified the expenses on events like technical functions for employee development. The Department contended that such events had no direct relation to output services. The judge recommended further verification of each event under the category of event management before allowing CENVAT credit.

4. Credential Verification of Employees:
The appellant argued that verifying employee credentials was crucial for maintaining service quality and business integrity. The judge agreed, acknowledging the importance of background checks in ensuring service quality and considered it a valid input service.

5. Garden Maintenance:
The appellant sought credit for garden maintenance, supported by previous decisions. The judge allowed the credit, considering garden maintenance as an input service.

6. Air Transport Service:
The appellant claimed CENVAT credit for air transport services, emphasizing the necessity for employee travel to fulfill job requirements. The judge, supported by precedent judgments, allowed the credit, recognizing the direct nexus between air transport and the output service.

7. Ineligible Services and Documentation Issues:
Certain services were disallowed due to lack of justification and documentation. The appellant did not press for these amounts, acknowledging the insufficiency of evidence.

8. Discrepancy in Credit Statements:
A variance in credit statements submitted and ST-3 returns filed raised concerns. The appellant clarified the discrepancies, attributing them to omitted entries. The judge directed the original authority to verify the correctness of the statements and determine the eligible CENVAT credit amount.

In conclusion, the appeal was partly allowed, remanding the matter back to the original authority for further verification of specific services. The decision was contingent upon the verification of documents to ensure the appropriate allowance of CENVAT credit.