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Sun Microsystems (I) Pvt. Ltd. Versus Commissioner of Service Tax Bangalore

2015 (11) TMI 1182 - CESTAT BANGALORE

Denial of CENVAT Credit - eligible input services - Nexus with output services - assessee are providing the facility of lease financing to their employees to purchase cars through lease finance company - Held that:- cost of EMI payable towards leased vehicle is recovered from the employees would show that this is only a ploy adopted to ensure that the benefit of depreciation of the vehicle can be availed by the company and benefit of service tax also can be availed by the company. Both these ben .....

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of the output service. In such a scenario it would not be appropriate to allow the assessee to avail the benefit of cenvat credit without incurring any cost and availing only the benefits which may offer to be passed on to the employee or may not be, with which I am not concerned. Therefore I do not find any reason to interfere with the decision of the lower authorities that assessee is not eligible for cenvat credit and the credit availed should be paid back with interest. - Penalty u/s 78 is w .....

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mount paid to lease finance company is collected from employees from their salary by the appellants. The service is provided to employees by the lease finance company and assessee is not utilizing any input services as per Rule 2(l) of CCR 2004 either directly or indirectly in providing the output services. Hence credit not eligible. This culminated in the issue of show-cause notice demanding service tax along with interest and penalty. After the proceedings before the original authority and the .....

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ken up for final decision. 3. Appellants lease cars and provide it to their employees. Lease agreement is between the assessee and the leasing company. The vehicle is in the name of the company. However the appellants recovered the EMI from the employees and paid it to the leasing company. The learned Commissioner has observed that other local taxes are also collected but in the absence of documentary evidence tax should not be considered. However the appellants take cenvat credit of the service .....

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facilities providing benefit to individual employees were excluded from the purview of input service. 4. I am unable to agree with these submissions. In the case of Outdoor Catering Service, this Tribunal has been consistently taking a stand that if amount is recovered in respect of any facility provided, to the extent of recovery, cenvat credit has to be disallowed. This was the view taken by the Hon ble High Court of Bombay in the case of CCE, Nagpur Vs. Ultratech Cement Ltd. reported in [2010 .....

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e worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Shri Shridharan, learned counsel for the assessee fairly conceded to the above position in law and in fact filed an affidavit affirmed by a responsible officer of the assessee wherein it is stated that the proportionate credit to the extent embedded in the cost of food recovered from the employee/worker has been reversed. In this case the fact that cost of EMI payable towards leased vehi .....

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