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TMI Blog2022 (9) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... order the recovery of interest at appropriate rate from M/s. IDBI Intech Ltd. under the provisions of Rule 14(ii) of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 and appropriate the Rs.18,62,142/- paid by them vide GAR-7 Challan No 50105 dated 03/07/2018. 21.3 I impose penalty of Rs. 32,51,210/-(Rupees Thirty Two Lakhs Fifty One Thousand Two Hundred Ten Only) on M/s. IDBI Intech Ltd. under the provisions of Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994." 2.1 The appellant is provider of services under the category of 'information & technology software service', 'commercial training service' and 'business auxiliary service'. They were also operating under cenvat credit scheme and availing cenvat credit of services paid on input services and capital goods received by them for providing output services. During the course of audit, it was detected that the appellant has availed inadmissible cenvat credit of Rs.32,51,210/- of service tax paid on outdoor catering services during the period 2012-13, from 01.07.2012 to 2017-18 upto June 2018. This is excluded from the definition of 'input service' defined under Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts (Regulation of Employment & Conditions of Service) Act, 2017 any establishment employing more than 100 employees is required to provide canteen facilities to their employees. Thus, the appellant was under a statutory obligation to provide catering services to its employees. * According to Rule 2(l) of the Cenvat Credit Rules, 2004 input service means 'any service used by a provider of output service for providing an output service but excludes services in relation to outdoor catering when such services are used primarily for personal use or consumption of any employee.' * Appellant was statutorily obliged to provide canteen services to enable it to carry out its business in due course. The canteen facilities are used in relation to business activities of company. * The Tribunal in the case of Hawkins Cookers [2021 (3) TMI 789] has held that the appellant is entitled to avail such credit provided the amount is paid by it and not collected from the individual employees to meet the expenses. * In the case of Ganesan Builder Ltd. [2018 (10) TMI 269] Hon'ble Madras High Court held that the employee insurance is provided under a statutory requirement stipulated in Workmen's co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness center, life insurance, health insurance and travel benefits extended to employee on vacation such as leave or Home Travel Concession, when such services are used primarily for personal use or consumption by any employee" On perusal of input service definition, it is clear that outdoor catering service, when such services are primarily used for personal use or consumption of an employee, then such service is excluded from the definition of input service. I find that issue of admissibility of cenvat credit on outdoor catering service with effect from 01.04.2011 has been examined by the Larger Bench of the Tribunal in the case of Wipro Ltd. Vs. CCE, Bangalore-III reported in 2018 (363) ELT 1111 (T-LB) and held that clause( c) of Rule 2) is specifically excluded the services provided in relation to outdoor catering service w.e.f 01.04.2011 although, such service was covered prior to 01.04.2011. It further held that once service is not covered due to exclusive clause irrespective of the fact whether cost of service has been taken as expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Join Secretary (TRU) explaining the intention of the Legislature for the changes brought by way of amendment in the definition of input service. Further, we also note that primarily the service should be first covered under the definition of input service and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for Cenvat credit. We also find that the food is always mainly for personal consumption only. The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded. whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. Therefore keeping in view above discussions and the various decisions cited by both the parties, we are of the considered were that the outdoor catering service is not eligible for input service credit post amendment dated 14- 2011 vide Notification No. 3/2011, dated 1-3-2011." I find that above decision has been given by Larger Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich allows for tariff in respect of the taxes paid on the input service and capital goods used by the manufacturer/service provider to be utilised for payment of central excise duty or service tax in respect of the goods manufactured and cleared for that output services provided. The boundary wall of the scheme has been drawn by way of defining various services such as input services. The definition of input services specifically excludes the outdoor catering services from the purview of the scheme. The argument that this service has been provided as per the Maharashtra Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2017 cannot be sustained in view of the specific exclusion provided by the definition incorporated in the scheme. 4.4 This issue came for consideration of Hon'ble High Court of Karnataka in the case of Toyota Kirolsaka Motor Pvt Ltd {2021 (50) GSTL 286 (Kar)]. Hon'ble High Court held as follows: "12. This Court has admitted the appeal on the following substantial question of law : "Whether the services received by the appellant in the capacity of employer for providing food and beverages in the canteen maintained and run in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to 1-4-2011 have been held to be covered by the definition of 'input service', however, after the amendment came into force in the light of specific exclusion clause, 'outdoor catering' service is not at all covered under the definition of 'input service'. 16. Heavy reliance has been placed upon a judgment delivered by the Madras High Court in the case of Ganeshan Builders Ltd., (supra). In the aforesaid case, there was an insurance in existence and it was not an insurance in individual worker's name. The Madras High Court has held that the insurance policy was assessee's specific and not employee's specific and as there was a mandatory duty casted upon the assessee to establish a canteen under the Building and Other Workers (Regulation of Employment and Conditions of Service) Act, 1996, has allowed the writ petition, whereas, in the present case no such contingency is involved. In the present case though the expenses incurred in respect of the canteen services for providing food and beverages in canteen maintained and run by the employer is included towards the total cost of the product and it is certainly required to establish under the Factories Act, 1948 (Section 46), but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LORD HALS-BURY and LORD SIMOND, means : "The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words" (Re, Micklethwait, (1885) 11 Ex 452, p.456. In a classic passage LORD CAIRNS stated the principle thus : "If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable, construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute". [Partington v. A.G., (1869) LR 4 HL 100, p.122 : 21 LT 370]. VISCOUNT SIMON quoted with approval a passage from TOWLATT, J. expressing the principle in the following words : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of "Input Service". In that view of the matter, it cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service. We are in complete agreement with the view taken by the High Court. Hence, the Special Leave Petitions stand dismissed." 4.6 Hon'ble Bombay High Court has in case of Solar Industries India Ltd [2022 (60) GSTL 216 (Bom)] took the note of the above said decisions and observed as follows: "5. We have heard the Learned Counsel for the parties at length and we have perused the order passed by the Tribunal disallowing the claim for Cenvat credit. It was found by the Tribunal that by virtue of the amendment dated 1-4-2011 renta- cab service had been excluded from the definition of the term "input service". The same was in three limbs and the material basis for denying such Cenvat credit was in view of Clause (B) to Rule 2(1) of the said Rules. We find that the Tribunal was justified in disallowing Cenvat credit for the reasons mentioned in the impugned order. This is also clear from a reading of Section 65(105) of the Finance Act which excludes rent-a-cab scheme. The transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order dated 24-7-2017 [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] has observed that there are divergence of views on the issue of availability of service tax on "outdoor catering services" and consequently, he has referred the matter to the President for constituting a Larger Bench to settle the issue of law. The reference order [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] is reproduced herein below : "2. The issue involved in this case is regarding availability of Cenvat credit of the service tax paid on "outdoor catering service". The appellant herein are an industrial unit having a manufacturing/service provider unit wherein they engaged the services of outdoor catering service for providing the catering services to their employees. Such service provider raised the bill along with service tax for which they availed the Cenvat credit. Department is of the view that such Cenvat credit cannot be availed after the provisions of Rule 2(l) of Cenvat Credit Rules, 2004 are amended which restricts availment of Cenvat credit in respect of "outdoor catering service". 3. Learned counsel relies upon the judgment of the Tribunal in the case of M/s. Hindustan Coca Cola Beverages Pvt. Ltd. - 2016-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent cannot be defeated by adopting interpretation which is clearly against such intent. Further, we find that from the Budget Speech of the Finance Minister dated 28-2-2011 wherein the Hon7ble Minister has categorically stated that due to complexities there has been many legal issues on the availability of credit on a number of inputs or input services which are being rationalized by laying down clear definition so that the scope of inputs and input services that are eligible and those that are not, is clear. Further, we also find from the clarification issued by the Joint Secretary (TRU) explaining the intention of the Legislature for the changes brought by way of amendment in the definition of 'input service'. Further, we also note that primarily the service should be first covered under the definition of 'input service' and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for Cenvat credit. We also find that the food is always mainly for personal consumption only. The canteen provided in the company is mainly for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THEIR EMPLOYEES AFTER AUDIT OBJECTION (OBJECTION ACCEPTED AND LETTER FOR WAIVER OF SCN IS GIVEN) BALANCE CENVAT CREIT DEMANDED UNDER PRESENT SCN (OBJECTION NOT ACCEPTED) 2012-13 7,11,425 -- 2,59,246 4,52,179 2013-14 8,81,272 -- 2,69,150 6,12,122 2014-15 7,68,572 31841 2,31,132 5,37,440 2015-16 8,6,160 2 96,442 -- 5,64,718 2016-17 10,74,025 3,62,292 -- 7,11,733 2017-18 (till 30/06/2017 5,14,511 1,09,652 -- 4,04,859 TOTAL 48,10,965 8,00,227 7,59,528 32,51,210 4.8 It was during the course of audit that this fact came to light that the appellant had availed the cenvat credit in respect of the excluded services. On specific query made by the Bench in this regard to the counsel as to produce any document to show that the fact of availment of cenvat credit was brought to the notice of the department earlier, the counsel replied in negative. The issue of limitation is the question of fact based on the existence of the ingredients provided by Section 73 of Finance Act, 1994 for invoking the extended period of limitation. The facts which were in the knowledge of the appellant but not disclosed at any time to the Revenue would be a suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X
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