9911796707
TMI Blog2025 (2) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by road etc. For this purpose, the Appellant is duly registered with the Service Tax Department vide Registration No. AAACL1745QST003. 3. Appellant is providing, after-sales service by Authorized Service Centres (ASCs) and Direct Service Centres (DSCs) to end consumers for their products. These services include In-warranty service, Annual Maintenance contract service (repair & maintenance) and Out-of-warranty service. For In-warranty service and AMC service provided by ASCs to end customers, the ASCs charge monthly compensation from the Appellant. However, for Out of warranty service, the repair and maintenance charges are collected by the ASCs from end customers. 4. The Appellant has provided a Toll-Free Telephone Number to its customers, in case they face any problem or defect with the product. These calls received by such call centres are transferred to DSC (owned by the Appellant), whereas if the customers are located in an area where no service centres are available then the calls are transferred to Authorized Service Centres. An agreement was entered between the call centres and the Appellant. 5. An audit of the Appellant's record was carried out for the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that a manufacturer is entitled to avail Cenvat Credit on all input services, the cost incurred on which becomes a part of the Assessable Value for payment of excise duty on final products. 11. He further submitted that the input service used is integrally connected with the manufacturing of the final product and the cost of such input service is included in the cost of the final product, as such credit of service tax paid on such input service is allowable. Reliance is placed on following judgments in support of such a preposition: a. CCE, Nagpur v. Ultratech Cement Ltd., 2010 (260) ELT 369 (Bom.) b. Coca Cola India Pvt. Ltd. v. Commissioner, 2009 (15) S.T.R. 657 (Bom.) c. Reliance Industries Ltd. v. CCE, 2014 (36) STR 467 (Tri.-Mum.) and d. BCH Electric Ltd. v. CCE, Delhi-IV, 2013 (31) S.T.R. 68 (Tri. - Del.) 12. The scope of the expression "in or in relation to" is very wide in nature and it will cover within its ambit all those services which are used in or in relation to the manufacturing activity. Admittedly, in the present case, the call centre services have an indirect nexus with the manufacturing activity of the Appellant, therefore the same would get cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly to cause sales promotion and accordingly the services provided by the call centre were admissible and covered under the inclusive part "sales promotion" of the definition of input services. Thus, it is submitted that the Credit of the service tax paid on the services received from the call centres is admissible. 18. The learned Departmental Representative appearing on behalf of the Revenue has justified the impugned order and prayed that the appeal filed by the Appellant, being devoid of any merits, be dismissed. 19. Heard both the sides and perused the appeal records. 20. We find that from the bare reading of the definition of 'Input Service', as defined under Rule 2(l) of the Cenvat Credit Rules, 2004, it is clear that, the definition is divided into two parts, i.e. (i) Means- Clause and (ii) Inclusive- Clause. Further, vide Notification No. 3/2011-CE (NT) an Exclusion-Clause was included in the definition. The services excluded were construction service, rent-a-cab service, general insurance service for motor vehicles and repair service. The Cenvat credit in relation to these services is allowable either to certain service providers only or on the satisfaction of ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant (Service Provider/ DSC) for providing an Output Service i.e. Repair and Maintenance Service. Thus, the impugned service falls within means clause of Rule 2(1) of Credit Rules. Therefore, the credit pertaining to Impugned Service provided by Call Centres to DSC (Appellant) could not be denied as the same is directly related to the output service provided by the Appellant. 25. The Commissioner has relied on various judgements in the Order-In-Original but none of them applies to the present case. The reasoning adopted by the Commissioner is completely flawed and the decision of the Tribunal in the case of Kohinoor Biscuits Products v. CCE, Noida, 2015 (37) STR 567 (Tri-Del.) which was later affirmed by the Hon'ble Allahabad High Court is not applicable to the present case since the 'includes' clause of the definition of input service extends to all those services which are related to post manufacturing activities. If the interpretation of the Commissioner in the impugned order is accepted, then the legislative intention on inclusion of services like accounting, auditing, legal services, business exhibition and market research will be frustrated and all of them will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find that the Appellants have made detailed arguments that the services of call centres qualify as input services under the Credit Rules. 30. Section 11A (1) of the Excise Act states that the demand could be raised against the assessee in cases of default only within a period of one year. The proviso extended the normal period of limitation only in cases where there is fraud, suppression, or misstatement of facts on the part of the assessee. Since the demand in the present case pertains to the period before as well as after 08.04.2011, the new as well as the old provisions of Section 11A need to be considered. However, since the provisions pertaining to the time limit are same during both the periods, there won't be any impact. 31. The demand raised in the present case by the SCN dated 05.09.2016 relates to the period from July 2011 to March 2016. Therefore, the demand amounting to Rs. 3,85,86,821/-, for the period upto July 2015, is barred by limitation as the SCN was issued after one year from the relevant date. 32. The Impugned Order does not disclose any evidence of any positive act of fraud, suppression, or wilful misstatement with the intention to evade payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal on identical facts has considered various decisions rendered on the issue of cenvat credit of service tax paid on repair and maintenance service during the warranty period and has also considered the definition of input service prior to 01.04.2011 and after 01.04.2011 and held as under:- "19. The issue, therefore, that arises for consideration in the present appeal is whether CENVAT credit of service tax paid by the appellant on 'repair and maintenance services' provided by the dealers for fulfilling the warranty obligations of the appellant has been denied for good and valid reasons. 20. To examine this issue, it would be necessary to reproduce the relevant portion of the definition of 'input service', as defined in rule 2(l) of the Credit Rules. Rule 2(l) was substituted by Notification dated 01.03.2011 w.e.f 01.04.2011 and it is reproduced below : w.e.f 01.04.2011 "2(l) "input service" means any service,- (i) used by a provider of output service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in relation to the manufacture of final products. 24. Further, we also find that the department has filed appeals before the Hon'ble High Court where the Tribunal has given the relief to the assessee but the decisions of the Tribunal in those cases have not been stayed and hence, the ratio of the said decisions are binding on the lower authorities. 25. Further, we also find that the department has not been able to distinguish the latest two decisions of the Tribunal in the case of Johnson Controls Hitachi Air Conditioning India Ltd. and M/s Case New Holland Construction Equipment (I) Pvt. Ltd. cited (supra) involving identical issues wherein all earlier decisions of the Tribunal were considered and thereafter, the demands were dropped. 26. Further, we are of the opinion that the decisions relied upon by the Revenue are not directly on the issue and does not reflect the controversy involved in the present case. 27. In view of our discussion above, we hold that the appellant has correctly availed cenvat credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers on behalf of the appellant for fulfilling the warranty obligations of the appellant. 43. The order dated 25.05.2018 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed." 6.3 Further, we find that the contention of the Revenue is that the earlier decisions of the Tribunal in the appellant's own case as well as in the case of CCE, Nashik vs. Mahindra & Mahindra Ltd. cited (supra), the department has filed appeal which is pending before the Hon'ble High Court of Punjab and Haryana and Hon'ble High Court of Bombay will not help the case of the Revenue because in both the cases only appeal has been admitted and no stay granted. 6.4 Further, we find that this Tribunal in various decisions relied upon by the appellant on identical issues has consistently held that the assessee is entitled to cenvat credit of service tax paid on Repair and Maintenance during the warranty period as the same fall within the ambit of "Input Service' as provided in Rule 2(l) of CCR, 2004." In view of the above we find that CESTAT has constantly been taking view in respect of admissibility of CENVAT credit in on warranty serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail Cenvat credit in a fraudulent manner. 40. As per Section 11AC of the Act read with Rule 15 of Cenvat Credit Rules, 2004 the penalty can be imposed only in cases of fraud, collusion, wilful misstatement or suppression of facts or contravention of provisions of Excise Act with an intention to evade payment of duty. The Appellant has already stated that they have not contravened any provisions of law as they did not avail any credit in contravention of any provisions of law. 41. According to Rule 14 read with Section 11AA, interest is chargeable only when any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded or Cenvat credit has been erroneously taken and utilized. The situations contemplated under Rule 14 as well as under Section 11AA are absent in this case. Therefore, where the demand of Cenvat credit is itself liable to be set aside, as a necessary consequence, interest is also not payable. Therefore, the impugned order confirming recovery thereof, is liable to be set aside and we do so. 42. In view of the above discussions, the impugned order cannot be sustained and is accordingly, set aside. The appeal filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves declared that the impugned services were performed at the places beyond the place of manufacture. These places are not connected with the completion of manufacture of goods having been removed from the factory. The said goods also have gone away from the place of removal before performance of service and it abundantly conveys to mean that the said service rendered by Call Centers were performed by a number of service providers at a place other than the place of manufacture, having no nexus directly or indirectly with the event of completion of manufacture of final products. 5.7 Having regard to the submissions advanced by the party on this score, it is seen that the inclusion clause of Rule 2 of CC Rules 2004 stipulates that "and includes services used in relation to setting up, modernization, renovation or repairs of factory, premises of output service or an office relating to such factory or premises, advertisement or sales promotion, market research,, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing. recruitment and quality, control, coaching and training, computer networking, credit rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 259/2013 EX (DB) dated 18-11-2013 (2014 (35) STR 751 (TRI- DEL)), wherein it has been held that in the case where the duty on the finished products is at specific rate or where the assessable value is determined under section 4A of the Contral Excise Act, 1944 and the provisions of Section 4 are not applicable, the definition of "place of removal" in the Section 4(3) (c) cannot be adopted for the purpose of Cenvat Credit Rules, 2004 and accordingly the place of removal would be the factory gate, ie. the place on removal from which the duty is liable to paid. 8. .........................................."since in this case the assessable value of the goods was being Watermined not under Sec. 4 but under Sec.4A of the Central Excise Act, 1944, the definition of "place of Removal" as given in Section 4(3) (c) cannot be adopted for the purpose of Cenvat credit rules 2004 and accordingly it is the factory gate which would be the place of removal. Moreover, even if the definition of "place of removal" is given in Section 4(3) (c) is treated as applicable to the cases where the duty on the finished goods is payable on the value determined under Section 4A, even then, the Depot of Mys Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, dismissed." 5.11 I note that sub-clause (qa) defining 'place of removal was inserted in Rule 2 of the Cenvat Credit Rules, 2004 vide Notification No. 21/2014-C.E. (N.T), dated 11.07.2014. The sub-clause (qa) to Rule 2 ibid is reproduced below: Place of removal means- (i) a factory or any other place or premises of production or manufacture of the excisable goods (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duly, (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, from where such goods are removed." 5.12 Applying the ratio of the above decision of the Hon'ble Allahabad High Court, Tribunal and Cotification No. 21/2014-C.E. (N.T), dated 11.07.2014 to the case in hand, I take the view that in this case the "place of removal in the matter cannot be accepted to be any place other than the factory gate (up to 10.07.2014) and factory gate, warehouse and depot (w.e.f 11.07.2014). In the instant matter, the party has taken credit of input services rendered and consumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed goods would be the products used in the manufacture of the goods. In another words, if the product is not integrally connected with the process of the manufacture and which does not results in utilization of such product directly or indirectly into the manufacture of the finished product, then such a product cannot be said to be the input utilized for or in relation to manufacture of the final product. This is also evident from the definition of the term input as found in Rule 2(k). The definition clearly uses the word "used" and further clarity the same with the expression "in or in relation to" and further uses these expressions with reference to the term "manufacture of final products". The definition disclosing the expression like "used", "in or in relation to", "the manufacture of final products" would inevitably disclose, that the same refer to only those products which are used in or integrally connected with the process of actual manufacture of the final product and only such product could be entitled to be classified as the input in or in relation to the manufacture of final products, and not otherwise. When the legislature in its wisdom has specifically defined a term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, but for the exclusion, the expression inputs would have included machines etc. This argument appears to us to be clearly untenable. The exclusion provided earlier clearly appears to have been so provided by way of abundant caution to clarify that the inputs in any case would not include machinery and equipment. From such a clarificatory provision, it cannot be concluded that the expression 'input' would include cement and steel items used for laying foundation and making supporting structures. Moreover, if for a moment one has to agree with the contention that Input included machinery etc. there would have been no need for providing a separate definition for capital goods and making a separate provision for allowing credit on capital goods. Such an argument cannot alao be accepted as it would imply that capital goods would be included twice in the definition under Rule 2(a) with limited scope and with unlimited scope under Rule 2(k). Such a proposition appears to be totally absurd as the rule-makers cannot be seen to have provided two separate definitions to cover the sane thing. There are also other rules in the Cenvat Credit aules namely Rule 3. Rule 3(1), Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sy as to what is the meaning of the word "input", conceptually. It was argued by the Department in a number of cases that if the identity of the input is not contained in the final product then such an item would not qualify as input. In order to get over this controversy in the above definition of "input", the Legislature has clarified that even if an item is not contained in the final product still it would be classifiable as an "input" under the above definition. In other words, it has been clarified by the definition of "input" that the following considerations will not be relevant : (a) use of input in the manufacturing process be it direct or indirect; (b) even if the input is not contained in the final product, it would still be covered by the definition. These considerations have been made irrelevant by the use of the expression "goods used in or in relation to the manufacture of final product" which, as stated above, is the crucial requirement of the definition of "input". Moreover, the said expression, viz, "used in or in relation to the manufacture of the final product" in the specific/substantive part of the definition is so wide that it would cover innumerable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... railway wagons and loaded on to the trucks which carried the goods by road to the factory. It is said that the security personnel were posted at that point to ensure the supply of the goods and the unloading/loading operations. The purpose of posting of security personnel must be discerned from the agreement between the appellant and security agency. But none is forthcoming. In this scenario, I am not in a position to accept the claim of the appellant that the security personnel were doing something, directly, or indirectly, in or in relation to the manufacture or clearance of final product. In other words, the claim is unsustainable. Coming to "rent-a-cab services", I am told that these services were used by functionaries, officials and employees of the company for purposes connected directly or indirectly with the manufacture or clearance of the final products. To a specific query from the Bench, the learned counsel submits that, if the representative of the company who is present in Court to assist him avails himself of "rent-a-cab service" for commuting between the administrative office of the company and this Court, Cenvat credit on the service is admissible to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso rely on the decision given by the Larger Bench of the CESTAT in the case of Tower Vision India Pvt. Ltd. Versus CCE (Adj) Delhi, reported in 2016 (42) S.TR 249 (Tri. Larger Bench). In this case, it was held by the Hon'ble Tribunal that since there was по пехus between duty paid inputs and the telecommunication services hence credit was not extendable. The larger bench observed that Cenvat credit was not available because Telecom companies have created infrastructure and provided such business support service to themselves. So, Infrastructure spun out to separate companies. In such case, no distinction could be made between telecom operators and Infrastructure companies in deciding eligibility of Cenvat credit on MS angles, channels, etc. and pre-fabricated shelters, used for fabricating telecommunication towers into concrete platform at ite. Therefore, Rule 2(1) of CC Rules, 2004 does not allow credit on such activities. The relevant paras (21 823) are reproduced below: 21. Learned Counsel relied on the Hon'ble Supreme Court's decision in CCE, Ahmedabad v. Solid & Correct Engineering Works reported in 2010 (252) E.L.T. 481 (S.C.). The Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded cases. In the present case, duty paid items are MS Angles and Channels/Shelters which are brought to the site installed/erected and further put to use for mounting/installing telecommunication antenna and other equipment. It is necessary to decide whether duty paid MS angles/shelter are used by infra-companies for providing business support service to telecom companies or for providing telecom service by telecom operators. This will bring us to the next question relevant to decide this issue. Question of nexus and Cenvat credit flow :- The duty payment is on MS angles, channels (or towers in CKD as claimed by the appellants) and pre-fabricated shelters. The credit of this duty is claimed. The admitted basic requirement for eligibility of any duty credit is that goods on which duty is paid (credit of which is claimed) should have a connection or nexus to the output service. The credit availed on input is used for discharging tax on output service. In the present case, the duty paid MS angles, channels, etc., are brought to the site, fabricated into towers on a concrete platform. Similarly, the duty paid pre-fabricated shelters are brought and fixed to the ground base firmly. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item. The various tower structures are erected at site and integrated to create the required infra structure. Hence, the decision of the Hon'ble Supreme Court that doors and electrical boxes are to be considered as parts of electricity generator is not of any help to appellants. Applicability of ratio followed for telecom companies to infrastructure companies :- On the above analysis, the first point for difference of opinion referred to this Larger Bench relating to non-applicability of the decision of the Hon'ble Bombay High Court in Bharti Airtel to infrastructure companies to provide business support service to telecom operators can be examined. We find in the normal course the nature of output service should not have any bearing to decide credit eligibility on capital goods now under dispute. A distinction was sought to be made that the decision of Hon'ble Bombay High Court was applicable only to active telecom service providers and not to providers of passive infrastructural support to such telecom operators. Reliance was sought to be placed on the decision of the Tribunal in GTL Infrastructure Ltd. v. CST, Mumbai reported in 2015 (37) S.T.R. 577 (Tri. - Mumbai) and Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch factual matrix, we find that no distinction could be made between the telecom operators and the infrastructure companies in deciding the eligibility of Cenvat credit on the impugned items now under consideration." 5.18 In the case of Vikram Ispat Vs CCE Raigad reported in 2010 (19) S.T.R. 52 (Tri.- Mumbai), I observe that that Hon'ble Tribunal have held that no service may be classified as input service unless quintessential requirements laid down in main part of definition is not established. In the absence of any nexus between a services and manufacture/clearance of goods, such services may not be termed as input services on which the assessee could claim benefit of credit of service tax. The Hon'ble Tribunal quoted the case of Manikgarh Cement Work Final Order No. A/632/2009/SMB/C-IV, dated 3-11-2009 with approval and held that - 5. I have considered the grounds of this appeal, the written submissions of the appellant and the argument of the learned SDR. The lower authorities have found that the barges and tugs were used in the sea and the channel and not in the jetty. In other words, it has been found that these vessels were operated in the sea and channel beyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Hon'ble High Court's decision, in their favour. On the other hand, ld. DR has heavily relied on the Hon'ble Supreme court's decision in Maruti Suzuki case. According to him, the Hon'ble Supreme Court's decision impliedly overrules the High Court's decision. I agree. In the case of Maruti Suzuki, the Supreme Court was considering the definition of 'input' given under the CENVAT Credit Rules. The definition reads as under :- "(k) 'input' means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the place of use. For example, one of the categories mentioned in the inclusive part is 'used as packing material'. Packing material by itself would not suffice till it is proved that the item is used in the course of manufacture of final product. Mere fact that the item is a packing material whose value is included in the assessable value of final product will not entitle the manufacturer to take credit. Oils and lubricants mentioned in the definition are required for smooth running of machines, hence they are included as they are used in relation to manufacture of final product. The intention of the Legislature is that inputs falling in the inclusive part must have nexus with the manufacture of the final product." (emphasis supplied) The above judgment of the Supreme court hands down an important ruling, which it is to the effect that, where the inclusive part of a definition provides a list of items, any such item should also satisfy the quintessential ingredients of the main part of the definition. In other words, the definition has to be considered in its entirety. The inclusive part is not independent of the main part. It is not a 'stand-alone' provision. This ruli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel, the Hon'ble High Court's decision in Coca Cola case should be followed as binding precedent in this case. I find that the Hon'ble Supreme Court's ruling in Maruti Suzuki case is to the contra and the same is constitutionally binding on this Tribunal. 7. In the result, the view taken by the lower appellate authority by following an earlier decision of this Tribunal which is presently under challenge before the Hon'ble High Court cannot be accepted. On the other hand, the view taken by the Ld. DR on the strength of the Hon'ble Supreme Court's ruling in Maruti Suzuki case should be followed. Accordingly, it is held that, as the respondent has not established nexus between any of the four services and the manufacture or clearance of excisable goods, the benefit of Cenvat credit in respect of such service cannot be allowed. It is ordered accordingly. However, I think, in a case of this nature, the assessee should not be penalised. This case involves rival interpretations of a provision of law. In typical cases of interpretative nature, penalties have been waived by this Tribunal. In this view of the matter, the order-in-original is sustained except in respect of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch cases need not be denied. The said ratio has been very categorically laid down by Hon'ble Bombay High Court in the case of M/s Coca Cola India Pvt. Ltd. 2009 (242) E.L.T. 168 (Bom.). However, I find the issue to be squarely covered by the said decision of Hon'ble Bombay High Court. Relevant paras of the said decision are reproduced as follows:- "19. To answer the questions framed we shall have first to answer as, what constitutes manufacturing cost? The Supreme Court in Union of India Vs. Bombay Tyres International [1983 (14) ELT 1896 (SC)] has held that all elements given to enrich the value of the excisable goods and contribute to its marketability, must form part of the manufacturing cost of the goods. The relevant portion of paragraph 49 of the said judgment is reproduced herein: "49. We shall now examine the claim. It is apparent that for purposes of determining the "value", broadly speaking both the old Section 4(a) and the new Section 4(1)(a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old Section 4(a) or under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court was considering the challenge to the levy of Central Excise duty on the basis of sale price. The assessees contended that the levy was on the manufacture of the goods and therefore the levy of Central Excise duty should be only on manufacturing cost and manufacturing profit. However, the Supreme Court held that even though the levy was on the manufacture, the measure can be with reference to the sale price. d. In this context, the Supreme Court observed that the price of article is related to its value and into that value several components are poured including those which have enriched its value and give to the article its marketability in the trade. Accordingly, the Supreme Court held that the expenses for marketing and selling the articles, including advertisement and publicity expenses would be one of the several components poured into the value of the goods under assessment and hence rejected the claim of the assessee, that value for levy of duty, should be only manufacturing cost and profit. Supreme Court therefore held that from the price, advertisement cost cannot be deducted. 21. That Advertisement of soft drink enhances the marketability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. [See ( i ) Stroud's Judicial Dictionary , 5th edn. Vol. 3, p. 1263 and (ii) C.I.T. v. Taj Mahal Hotel 1 , ( iii) State of Bombay v. Hospital Mazdoor Sabha. This has been reiterated in C.I.T. Vs. T.T.K. Health Care Ltd. (2007) 11 SCC 796. In M/s. Mahalakshmi Oil Mills Vs. State of Andhra Pradesh, AIR 1989 Supreme Court 335, the Court dealing with the expression "means and includes" observed as under : "As Lord Watson observed in Dilworth v. Commissioner of Stamps [1899] AC 99 the joint use of the words "mean and include" can have this effect. He said, in a passage quoted with approval in earlier decisions of this Court: "Section 2 is, beyond all question, an interpretation clauses, and must have been intended by the Legislature to be taken into account in construing the expression "charitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Considering these judicial pronouncements, it is clear that the expression "means and includes" is exhaustive. By the word "includes" services which may otherwise have not come within the ambit of the definition clause are included and by the words means these are made exhaustive. 24. The next expression to be considered from the definition is "such as". A few dictionary meanings of the term "such as" are reproduced: Concise Oxford Dictionary, 'Such as' means for example or of a kind that; Chambers Dictionary, 'Such as' means for example: In Good Year India Ltd V/s Collector of Customs 1997 (95) ELT 450 the Supreme Court observed as under: "The words such as stainless steel, nickel monel, incoloy, hastelloy in sub-heading (2) are only illustrative of the various metals from which valves can be made but the said description is not exhaustive of the metals." The words "such as" therefore are illustrative and not exhaustive. In the context of business, these are services, related to the business. They may not be exhaustive, but are illustrative. 25. The expression Business is an integrated/continuous activity and is not confined restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India 1988 (36) ELT 201 (SC), interpreting the expression in relation to: 48. The expression in relation to (so also pertaining to), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10,following and approving Nitai Charan Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lal v. M. Shayamlal (A.I.R. 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with. It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to. The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALL) wherein the dispute was that if a sales company voluntarily reduced its own commission which it received from the manufacturing company so as to support the manufacturing unit, whether it amounts to a business expenditure? The claim was disallowed by ITO and AAC on appeal. The tribunal allowed the expenditure on the finding that the same has incurred wholly and exclusively for the purpose of assessee's business out of commercial expediency. This view was upheld by the Hon'ble High Court observing as under: "A sum of money expended, not of necessity and with a view to a direct and immediate benefit to the36 trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purposes of the trade. This test has been quoted with approval and applied by the Supreme Court in Eastern Investments Ltd. vs. CIT (1951 ITR 20 ITR 1 SC)). 30. The House of Lords in the context of Credit under VAT itself, in Customs and Excise Commissioners v. Redrow Group Plc. (1999 Simon Tax Cases 161) has taken an identical view relating to input V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, because the concept does not all for that kind of analysis. The service is that which is done in return for the consideration. As one moves down the chain of supply, each taxable person receives a service when another taxable person does something for him in the course or furtherance of a business carried on by that other person for which he takes a consideration in return. Questions such as who benefits from the service or who is the consumer of it are not helpful. The answers are likely to differ according to the interest which various people may have in the transaction. The matter has to be looked at from the standpoint of the person who is claiming the deduction by way of input tax. Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted value added tax? The fact that someone else in this case, the prospective purchaser also received a service as part of the same transaction does not deprive the person who instructed the service and who has had to pay for it of the benefit of the deduction. & (emphasis supplied) Then in the speech of Lord Millet it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court of Justice in B.L.P. Group Plc. v. Customs and Excise Commissioners (Case C-4/94) [1996] 1 W.L.R. 174. I would allow the appeal and affirm the decision of the value added tax tribunal. 31. CBEC by Circular No. 80/10/2004-ST dated 17.09.2004, inter alia, clarified as under: Service Tax like CENVAT is basically a value added tax which is operated through credit mechanism. 32. CBEC Circular No. 56/5/2003-S.T. dated 25.04.2003 issued in the context of export of services, clarified that service tax is a consumption tax. Relevant extract is reproduced herewith as under (remaining paragraphs in context of export of services are not quoted here): "I am directed to clarify that the Service Tax is destination based consumption tax and it is not applicable on export of services." 32A. Name of tax was rechristened as Cenvat w.e.f. 12.05.2000. Section 3 of Central Excise Act, 1944 as it stood before 12.05.2000 read as under:- SECTION 3. Duties specified in the [the First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 to be levied - (a) a duty of excise on all excisable goods which are produced or manufactured in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property based services and performance based services. Property based services cover service providers such as architects, interior designers, real estate agents, construction services, mandapwalas etc. Performance based services are services provided by service providers like stockbrokers, practising chartered accountants, practising cost accountants, security agencies, tour operators, event managers, travel agents etc.. 20. On the basis of the above discussion, it is clear that service tax is VAT which in turn is both a general tax as well as destination based consumption tax leviable on services provided within the country. (emphasis supplied) 34. It is therefore, clear that the burden of service tax must be borne by the ultimate consumer and not by any intermediary i.e. manufacturer or service provider. In order to avoid the cascading effect, the benefit of cenvat credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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