2017 (8) TMI 1049 - AT - Service Tax

Refund claim - input services - Rent-a-Cab Service - whether the Rent-a-Cab service at the relevant time is excluded from the definition of input service or otherwise? - Held that - As such the interpretation of the lower. authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated in as much as motor vehicles are admittedly capital goods in terms of the Rule 2(A) of Cenvat Credit Rules - appellant in the facts of the present case is entitle for the Cenvat credit in respect of Rent-a-Cab services and also for consequential refund - appeal dismissed - decided against Revenue.

Summary

Issues involved: Entitlement to Cenvat Credit for Rent-a-Cab Service and consequential refund under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
1. The issue in question was whether the respondent was entitled to Cenvat Credit for Rent-a-Cab Service and subsequent refund under Rule 5 of the Cenvat Credit Rules, 2004. The matter was initially listed for a stay of the Revenue, but with the consent of both parties, it was taken up for final disposal.

2. The Revenue argued that the Commissioner(Appeals) wrongly allowed the refund for Rent-a-Cab Service, citing that it was specifically excluded from the definition of input service effective from 1-7-2012, whereas the period in question was January 2012 to March 2014. The Revenue contended that the exclusion of Rent-a-Cab Service meant that the refund should not have been granted.

3. On the other hand, the respondent's counsel argued that the exclusion of Rent-a-Cab Service was conditional, stating that it would only be excluded if the motor vehicle used for the service was not considered capital goods. Since the motor vehicle fell under the definition of capital goods, the Rent-a-Cab Service should not be excluded from the definition of input service. The counsel relied on a previous tribunal decision to support this argument.

4. After considering both sides' submissions and reviewing the records, the Tribunal focused on determining whether Rent-a-Cab Service at the relevant time was excluded from the definition of input service. The relevant exclusion provision was examined, which stated that services provided by renting a motor vehicle would be excluded only if the motor vehicle was not considered capital goods.

5. The Tribunal found that the motor vehicle used for providing Rent-a-Cab Service was indeed considered capital goods, based on the definition provided. Therefore, the Rent-a-Cab Service itself should not be excluded from the definition of input service. The Tribunal referenced a previous decision where a similar interpretation was made, supporting the admissibility of credit for such services.

6. The Tribunal identified a flaw in the appellate authority's interpretation, emphasizing that the status of the motor vehicle as a capital good should be assessed based on the service provider, not the recipient. The lower authorities' interpretation was deemed incorrect, as motor vehicles were acknowledged as capital goods under the Cenvat Credit Rules.

7. Based on the analysis and the precedent set by the previous tribunal decision, the Tribunal concluded that the appellant was entitled to Cenvat Credit for the Rent-a-Cab Service and subsequent refund. The impugned order was set aside, and the appeal was allowed with relief for the appellant. The Revenue's appeals were dismissed, and stay applications were disposed of accordingly.