2017 (11) TMI 1467 - AT - Service Tax

CENVAT credit - input services - Warehouse Charges - Taxi Charges - Bank Guarantee - Insurance charges - Commission charges - period of dispute involved in this case is from 2006-07 to 2011-12 - Held that - the services used by the provider of taxable service for providing the output service are considered as input service for the purpose of the benefit of cenvat credit. Further under the un-amended definition of input service (effective upto 28.02.2011), the phrase activities relating to business was specifically finding place in such definition clause - Since the appellant has availed the disputed services for accomplishing the business activities, the cenvat benefit under the inclusion part of the definition is available to the appellant for consideration as input service on the disputed services. Even under the amended definition of input service w.e.f 01.03.2011, the appellant will also be eligible for cenvat credit benefit on the disputed service, on the ground that the said services are not falling under the excluded category as provided under clause (A), (B) and (C) of the definition of input service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of cenvat credit on service tax paid for Warehouse Charges, Taxi Charges, Bank Guarantee, Insurance charges, and Commission charges.

Analysis:

1. Bank Charges:
The appellant argued that bank charges for financial services like Bank Guarantee issuance are essential for providing taxable output services. They relied on precedent cases to support their claim. The Tribunal agreed, stating that since the services were used for business activities, they qualify as input services eligible for cenvat credit.

2. Insurance Charges:
The appellant contended that insuring goods is crucial for providing Works Contract services. They cited previous Tribunal decisions to support their argument. The Tribunal agreed, emphasizing that insuring capital goods is indispensable for service provision, making insurance charges eligible for cenvat credit.

3. Taxi Charges:
The appellant used Rent-a-cab services for employee transportation related to business activities. They referenced various cases to support their claim. The Tribunal agreed, stating that since the services were essential for service provision, they qualify as input services eligible for cenvat credit.

4. Warehousing Service:
The appellant paid warehousing rent for storing materials crucial for providing Works Contract and Maintenance services. They relied on Tribunal decisions to support their argument. The Tribunal agreed, stating that storage of goods is essential for service provision, making warehousing charges eligible for cenvat credit.

5. Commission Charges:
The appellant paid commission charges for after-sales services through third-party dealers. They argued that the services were used for providing output services. The Tribunal agreed, stating that since the services were utilized for service provision, they qualify as input services eligible for cenvat credit.

6. Legal Analysis:
The Tribunal examined the definition of input service under the Cenvat Credit Rules during the relevant period. They highlighted that services used for providing taxable output services are considered input services for cenvat credit. They emphasized that business-related activities were explicitly included in the definition. The Tribunal concluded that the disputed services used by the appellant for business activities qualified as input services for cenvat credit, as per precedent cases. Hence, they allowed the appeal, setting aside the impugned order in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, allowing cenvat credit on the disputed services like Bank Charges, Insurance Charges, Taxi Charges, Warehousing Service, and Commission Charges, as they were deemed essential for providing taxable output services and fell within the definition of input services under the Cenvat Credit Rules.