2008 (12) TMI 118 - AT - Service Tax

Input stage credit of the Service tax amount paid by the service provider of Canteen Services, Rent-a-Cab Services and on the Group Health Insurance Services - appellant claims that the canteen services, transportation charges for transportation of their employees and the Group Insurance Health Policy for which they have paid Service tax to the service providers, is in or in relation to the manufacturing activity - lower authorities are not justified in holding that the appellants are not eligible to avail the credit of Service Tax paid

Summary

Issues:
- Eligibility of input stage credit for Service Tax paid by service providers of canteen services, transportation charges, and group health insurance services in relation to manufacturing activity.

Analysis:

The judgment by the Appellate Tribunal CESTAT Bangalore revolves around the eligibility of input stage credit for Service Tax paid by service providers of canteen services, transportation charges, and group health insurance services in relation to manufacturing activity. The appellant claimed that these services were related to the manufacturing activity, while the lower authorities held otherwise, leading to demands, penalties, and interest. The appellant's advocate argued that the services provided were integral to the manufacturing process, citing relevant Tribunal decisions. On the other hand, the respondent contended that these services were welfare measures for employees and not directly related to manufacturing activity, supporting the Commissioner's findings.

The Tribunal analyzed the submissions and records, emphasizing that the appellant was a manufacturer and that the services in question were related to the employees working in the factory premises. Referring to a Tribunal decision, the Tribunal highlighted that Service Tax paid by outdoor catering services was eligible for input stage credit, citing the legislative intent and the context of the credit rules. The Tribunal also referenced another Tribunal decision regarding the transportation of employees, stating that such services indirectly related to manufacturing activities and were eligible for credit. The Tribunal concluded that the group insurance health policy for employees fell under the same category, ultimately ruling in favor of the appellant.

In summary, the Tribunal set aside the impugned orders, allowing all appeals with consequential relief, if any. The judgment, pronounced on 31-12-2008, clarified the eligibility of input stage credit for Service Tax paid by service providers of canteen services, transportation charges, and group health insurance services in the context of manufacturing activity, aligning with relevant Tribunal decisions and legislative intent.