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TMI Blog2022 (6) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... its business and may pay service tax on them. If the legislative intent was to allow a provider of output service to avail Cenvat Credit on all such services, the rule would have read as any service used by the provider of output services . However, it does not read so. It qualifies the definition by for providing output services . Therefore, there could be services which are used by the provider of output services who provide output services and there could be services used not for providing output service for some other business purpose. In our considered view the corporate social responsibility falls under the second category. It has no nexus to providing any input services. Several services which are not directly input services for providing of output services or which are not used for manufacturing final product have been included in the inclusion part of the definition under rule 2(l) - It is not open for this Tribunal to modify or enlarge the scope of this Rule which is a legislative or quasi-legislative function. Extended period of limitation - imposition of penalties - HELD THAT:- There is no evidence of fraud or collusion or wilful statement or suppression of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to the manufacture of final products and clearance of final products upto the place of removal,] and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; [but excludes]. (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or execution of works contract of a building or a civil structure or a part thereof; or 3 ST/50753/2017 (b) laying of foundation or making of structures for support of capital goods, except for the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(l) of CCR Rules 2004. iv. Reliance is placed on the following case laws: a. C. Ex Service Tax, Chennai vs. Brakes India Ltd. reported as 2019 (369) ELT 577 (Mad.) b. Commr. Of C. Ex. Bangalore vs. PNB Metlife India Insurance Co. Ltd. reported as 2015 (39) STR 361 c. Gatway Terminals (I) Pvt. Ltd. vs. Commr. of C. Ex Raigad reported as 2015 (39) STR 1027 (Tri-Mumbai) d. Commr. Of C. Ex, Bangalore Vs. Millipore India Pvt. Ltd. reported as 2012 (26) STR 514 (Kar.) e. Essel Propack Ltd. vs. Commr. Of CGST Bhiwandi reported as 2018 (362) ELT 833 (Tri-Mumbai) v. The matter has already been decided in favour of the appellant in the case of Essel Propack Ltd. and Millipore India Pvt. Ltd. (Supra). vi. The appellant has taken Cenvat Creidt under the bonafide belief that it is entitled to it and still look at the same belief. Therefore, extended period of limitation should not be invoked. vii. The penalty under section 76 of Finance Act 1994 is for non payment or short payment of service tax but in this case the dispute is only regarding Cenvat Credit. Accordingly, the penalty cannot be imposed. 5. It is therefore prayed that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant were banking and other financial services . These services can be rendered and were rendered using various input services. After rendering these services the appellant earns some profit or meets other criteria laid down under section 135 of the Companies Act 2013. This results in a legal obligation on the appellant to spend some amount on the activities of corporate social responsibility. Of course, not fulfilling this responsibility attracts penalties under the Companies Act. Similarly, the company will also have other responsibilities towards their stakeholders such as payment of bonus, productivity linked incentives, etc. All these are consequent to the rendering of the output services and not before they are rendered. Input services are those which are used for providing the output services. Corporate social responsibilities arise if, after providing the output services, the appellant earns some profits, etc. A plain reading of the relevant portion of Rule 2(l) of CCR, 2004 shows that not any service used by the provider of output services in running its business qualifies as input service but only such services which are used by such provider for providing an out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsibility expenses cannot be called as an input service for providing the output services. The fact that the corporate social responsibility is a legal responsibility does not make it an output service. Several case laws were cited by the appellant. However, most of these do not deal with CSR. Learned counsel for the appellant mainly laid emphasis on Millipore India Pvt. Ltd. and Essel Propack Ltd. (Supra). We have examined these case laws. Hon ble High Court of Karnataka as in the case of Millipore India Pvt. Ltd. stated as follows as in para 7: That apart, the definition of input services is too broad. It is an inclusive definition. What is contained in the definition is only illustrative in nature. Activities relating to business and any services rendered in connection there- with, would form part of the input services. The medical benefit extended to the employees, insurance policy to cover the risk al accidents to the vehicle as well as the person, certainly would be a part of the salary paid to the employees. Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc., of the office premises. A any rate, the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the matter at length, paras 8 11 of which are reproduced below: 8. The refusal of such Cenvat credit availed by the appellant by the department, was mainly on three scores. First CSR is a charity which is unrelated to production. Second, no direct service was availed by the appellant from the said Kalama Charitable Trust as it had made the expenditure itself and sought reimbursement from the appellant. Third, the same is not in conformity to the Rules meant for raising of invoice as contemplated under Rule 9(2) besides being outside the scope of input service defined under Rule 2(1) of the Cenvat Credit Rules, 2004 for which the credit as referred above was inadmissible. . .. .. 11. To pin point the dispute, it is now to be looked into as to if CSR can be considered as input service and be included within the definition of activities relating to business and if in so doing, a company's image before corporate world is enhanced so as to increase its credit rating as found from the handbook of CSR activities discussed above. The answer is in the affirmative since to win the confidence of the stakeholders and shareholders including the people affected b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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