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2022 (6) TMI 582 - AT - Service TaxCENVAT Credit - input services - services used for activities related to its corporate social responsibility [CSR] - non compliance of section 135 read with section 134 of the Companies Act - extended period of limitation - penalty - HELD THAT:- Undisputedly, the output services rendered by the 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. A provider of output service may utilise several services in 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 the facts in the matter. Accordingly the demand can only be raised within the normal period of limitation. The denial of Cenvat Credit on the expenses incurred on corporate social responsibility within the normal period of limitation is upheld. The demand for extended period on limitation and the penalties are set aside. The matter is remanded to the original authority for limited purpose of calculating the amount of Cenvat Credit to be denied - Appeal allowed by way of remand.
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