Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2015 (10) TMI 1300

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... paid on input services viz. Garden Maintenance services, Event Management Services, Outdoor catering Services (canteen) services, Telephone Services & Brokerage Charges. 2. The brief facts of case are the appellant, inter alia, is engaged in the business of providing 'Port' services. They are, accordingly, registered with the service tax department. The appellant uses various input services for providing the taxable output services and in turn are availing and utilizing credit of service tax paid on input services as per Rule 3(1) read with Rule 3(4) of the CENVAT Credit Rules, 2004. 3. Show-cause notices were issued to the appellant denying credit of Service tax paid on input services as mentioned above in the table, alleging that the aforesaid services do not qualify as "Input Services" inasmuch as there is no nexus between the input services and the output services provided by the appellants and the said expenses are in nature of a welfare activity. The said show cause notices were dropped in part by the adjudicating authority except for demand pertaining to credit availed on outdoor catering services for period post April, 2011, vide order-in-original dated 31-1-201 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... g service, market research etc.) which are received in relation to the offices pertaining to a manufacturer or service provider would also be allowed." 4.2 Learned Counsel further states that the rules as introduced with effect from 10-9-2004 have wide connotation than the draft definition as under the draft Cenvat Credit Rules. The term "used in relation to setting up a factory," was contemplated, it was widened to read as "used in relation to setting up, modernization, renovation or repairs of a factory or office relating to such factory". The Cenvat Credit Rules expanded the said term to read as 'activities relating to business', which was expanded and illustrated further with the addition of 'services' such as coaching and training, share registry, credit rating, etc. which pertain to various aspects of the activities relating to business. Hence, the manifest intention of the Legislature is to allow credit on all services which are activities relating to business of the assessee. 4.3 Learned Counsel clarifies that as the issue involved in present case is one of interpretation, the issue is purely legal in nature. The definition of "input service" has been subject to .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the functioning of a business. 4.4 Learned Counsel further submits that, various limits of definition of input service are independent/diverse/concession/exemption. If an assessee can satisfy any one of the limbs of the definition of input service which is effectively divided into four categories as below, then credit would be available : (a)     Any service used by the service provider for providing output service; (b)     Services used in relation to setting up, modernization, renovation or repairs of a factory, or an office relating to such factory, (c)     Services used in relation to advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, (d)    Services used in relation to activities relating to business and outward transportation upto the place of removal;" As per Kerala State Co-operative Marketing Federation Ltd. and Ors. v. Commissioner of Income tax - 1998 (5) SCC 48, the Supreme Court, inter alia, held as under : "We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sect .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation and such as leave or home travel : concession, when such services are used primarily for personal use or consumption of any employee.'' will not apply in the facts of present case, as the said clause would only apply in case when such services are used primarily for personal use or consumption of an employee. The learned Counsel has cited the Hon'ble Supreme Court judgment in the case of Union of India v. Hansoli Devi - (2002) 7 SCC 273, wherein it has observed that "the legislature never waste its words or say anything in vain and a construction which attributes redundancy to legislation will not be accepted except for compelling reasons". 5. The learned Counsel as well as learned A.R. have cited various judgment as follows :- 5.1 The learned AR appearing on behalf of department has strongly relied on Hon'ble Supreme Court judgment in case of Maruti Suzuki Ltd. v. CCE, Delhi-III - 2009 (240) E.L.T. 641 (S.C.), wherein, it w .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... outdoor catering services vide clause (C) of the definition of Input Services, which was effective from 1-4-2011 is not applicable to employees (plural) . The DR submits that Hon'ble SC of India in Judgment in United Electrical industries Ltd [1999 (108) E.L.T. 609 (S.C.)], at para 7 of judgment had held, as provided in Sec. 13 of General Clauses Act, 1897, the word singular shall include plural and vice versa. 5.4 In relation to services rendered in case of Event Management services Appellant submits that said Input Services of Event management is an essential input service in relation to the sales promotion activities of the appellant. Hence Cenvat credit of the Input Service should be allowed. The appellant relies on ruling of the Hon'ble Karnataka High Court [2011 (24) S.T.R. 645 (Kar.)], wherein it is held that expenses incurred for welfare of employees cannot be separated from the business of manufacture of final product. 5.5 In relation to garden maintenance service, learned AR relies on GKN Sinter Metals Ltd. v. Commissioner of Central Excise, Aurangabad - 2009 (16) S.T.R. 615 (Tri.-Mumbai) stating that the garden maintenance service has no nexus with manufactu .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates