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2019 (10) TMI 690 - AT - Service TaxCENVAT Credit - input services - outdoor catering service - rent a cab service - rejection on the ground that it has no nexus with the output service of the Appellant - period in dispute is April, 2007 to March, 2010 - HELD THAT - The services of outdoor catering are used by the appellant for its business activity during office hours and not as a personal or welfare measure for its employees nor it s a perk/ perquisite provided by the appellant to its employees. The Appellant is also not recovering the cost of the same from its employees. The said service has been debited to P L A/c of the Appellant, as a business expenses. Rent-a-cab service - HELD THAT - It is the case of the appellant that the said cab service is utilized for providing facilities to the appellant s employees for travelling from office to client s place for business purpose. The said service is not being used for the personal use of the employees. Alongwith the Memo of Appeal, the Appellants have filed details of 75-100 invoices to establish the nexus between the aforesaid input service with the output service - Rent-a-cab service has been excluded from the definition of input service by the 2011 amendment w.e.f. 1.4.2011 and prior to that it was within the definition of input service. The services of outdoor catering service as well as rent-a-cab service are in relation to the business activity undertaken by the Appellant and the Appellant is eligible for Cenvat Credit of the aforesaid input services - submission of the Revenue that input services do not have direct nexus to the business activity of the Appellant is not sustainable - Appeal allowed - decided in favor of appellant.
Issues:
Claim of Cenvat credit on outdoor catering service and rent-a-cab service rejected by authorities as inadmissible due to lack of nexus with output service. Analysis: The appeal challenged the order rejecting Cenvat credit on input services, including outdoor catering and rent-a-cab services, by the Commissioner GST & CX (Appeals-III). The Appellant contended that these services were integral to their advertising business operations. The Appellant availed outdoor catering for business meetings with clients and employees during business hours, emphasizing it was not for personal use. Similarly, rent-a-cab service was used for employees to reach client locations promptly for business meetings only. The Appellant argued these expenses were necessary for efficient business operations and thus eligible for Cenvat Credit. The definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 was crucial in determining the eligibility for credit. The definition encompassed services used directly or indirectly in or in relation to business activities. The Appellant provided detailed documentation, including invoices, to establish the business necessity of these input services. The Tribunal observed that outdoor catering and rent-a-cab services were utilized for business purposes, not as personal benefits to employees. The services were charged as business expenses and not recovered from employees, indicating a clear business nexus. Regarding rent-a-cab service, although it was excluded from the definition of input service post a 2011 amendment, the Appellant availed the service before this amendment. Citing a relevant circular, it was clarified that credit on rent-a-cab service would be available if provided before 1.4.2011, which was the case here. The Tribunal emphasized that input services extended beyond direct provision of output services to include activities related to the business. Therefore, both outdoor catering and rent-a-cab services were deemed essential for the Appellant's business activities, warranting eligibility for Cenvat Credit. In conclusion, the Tribunal found the Revenue's argument of a lack of direct nexus between input services and the Appellant's business activity unsustainable. Consequently, the appeal was allowed, granting the Appellant consequential relief, if any, affirming their entitlement to Cenvat Credit for the specified input services.
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