9911796707
TMI Blog2024 (6) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act, 1994. The appellants are eligible to avail CENVAT credit of duties and taxes paid on inputs, capital goods and input services received by them for providing output services in terms of CENVAT Credit Rules, 2004 (CCR). During the course of audit of accounts of the appellants, the departmental authorities have noticed that the CENVAT credit availed on few input services are not eligible as per the provisions of Rule 2(l) ibid. These included security services in respect of their Nagpur Hotel land on the ground that it is not covered under the Service Tax Registration Certificate, Commission/service charges paid on sale of land at Coimbatore for total amount of Rs.3,51,394/- covering the period 2012-13 to 2014-15. Further, vehicle hire charges, vehicle expenses, club membership charges on which CENVAT Credit was taken as input services for total amount of Rs.14,231/- was also objected to as services relating to motor vehicles were excluded under Clause (B) & (BA) of Rule 2 (l) ibid. The Audit also pointed out that an amount of Rs.26,449/- was an excess credit amount utilised in comparison with both CENVAT Register and ST-3 Returns and the same is liable to be paid by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the appellants are engaged in providing output services in the hospitality sector since 1986.The hotels and restaurants are located in different locations as per their business opportunities. The company has obtained a separate service tax registration for each of its operational units in the respective jurisdiction. Till a hotel or restaurant is set up and its operations begins as a separate entity requiring a service tax registration, the various services provided in establishing the hospitality service chain by the headquarters of the hotel is eligible to take input credit of the tax paid on the services consumed. Accordingly, he claimed that in providing such output service, the appellants had availed CENVAT Credit paid on input services such as services provided to safe guard/protect and secure the land parcels against encroachment, services availed in respect of the brokers or agents through whom sale or purchase of land can be transacted and hence these services are essential input services. He further stated that CENVAT Credit availed in respect of the above services is not excluded under clause B of rule 2(l) of CCR, 2004. Thus, he claimed that the impugned order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of output service. The services which are in dispute are security service, professional service in assisting the business. 7. It can be seen from the factual matrix of the case that both the security service and professional service were utilized by the appellants during the course of conducting certain activities which forms a part of providing output service. For example, the land or building unless it is properly secured in order to provide short-term accommodation for the service receivers, who are likely to stay therein, the appellants may not be able to effectively provide the output service. Further, the appellants had taken professional service in certain business transaction for the proposed land in Coimbatore in provision of output service and the service tax has also been properly paid by such professional, which are being taken as input service credit. Thus, prima facie, when the service tax has been duly paid on the input services and the when such services were utilised in provision of output service, then taking of CENVAT Credit cannot be objected to inasmuch as Rule 3 of CENVAT Credit Rules, 2004 specifically state that a provider of output service to avail suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eauty 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 such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee. Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis." 8.2 On careful reading of the definition of 'input service' under Rule 2 (l) of CCR, 2004 as above, I find that it provides for three categories of services, out of which first category refers to (i) 'means' part of the definition, generally cover services which are used directly or indirectly, in or in relation to manufacture of final goods or for providing of output services; and second category refers to (ii) 'inclusion' part of the definition, specifically state certain services used in relation to various activities, which is used in relation to the manufacture of final products or provision of output services, both of which are covered under the scope of 'input services'. Further, the third category, (iii) 'exclusion' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide for services used in relation to 'security'. Similarly, services used in relation to 'legal services, financing, accounting, procurement of inputs, sales promotion etc.' have also been specifically provided for in the 'inclusion' part of the definition. Further, I find that these input services which are under dispute i.e., security services, professional/legal services have not been covered under the third part of 'exclusion' list. Even here, services used for personal consumption or those specific exclusion category of services, alone are ineligible for availing CENVAT Credit as input service. Inasmuch as the disputed input services as above are covered under the 'means' and 'inclusion' part of the definition of 'input service' under Rule 2(l) ibid and are not covered by 'exclusion' part of the definition, I find that there is no legal basis for denial of CENVAT Credit on these services. 8.5 I find that the grounds for rejection of CENVAT Credit on input services in the order of the adjudicating authority which was upheld by the learned Commissioner (Appeals) is that the input services have not been specifically used in the premises which have not been registered with l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (B)and clause (C) to Rule 2(l) of the CCR, 2004 and thus the impugned order denied the CENVAT Credit. In this regard, I find that the exact wordings used in the Clause (B) has two limbs, one is that the 'services provided by way of renting of a motor vehicle' and the other second one is that 'in so far as they relate to a motor vehicle which is not a capital goods'. The qualifying link to this exclusion is that the excluded services shall be 'used by a provider of output service for providing an output service'. In the present case, it is clear that the appellants had availed the service of Rent-a-Cab operator vehicle service in relation to provision of output service, hence the link is fulfilled. Further, the Rent-a-Cab operator vehicle service is fully covered by the first limb of 'services provided by way of renting of a motor vehicle'. However, when it comes to the second limb, it has to be seen whether the input service qualifies the requirement that, 'in so far as they relate to a motor vehicle which is not a capital goods'. In this regard, I find that the term 'capital goods' has been defined for the purpose of CENVAT Credit Rules, 2004 under Rule 2(a) ibid which is extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices' in the present case. Similarly, the club membership services when used primarily for personal use has been excluded from the scope of input service by clause (C) of Rule 2(l) ibid in specific terms. In view of the above, the appellants are not eligible to avail CENVAT Credit for an amount of Rs. 14,231/- in respect of the above services as an input service. Thus, the impugned order upholding the demand of CENVAT Credit and appropriation of the amount already paid by the appellants totalling to Rs.18,807/- (inadmissible CENVAT Credit of Rs.14,231/- plus interest of Rs.4,576/-) is sustainable. 8.7 As regards the alleged CENVAT Credit availed in excess to the tune of Rs.26,449/- which have been confirmed by the original authority and upheld in the impugned order, I find that such determination of excess availment is with respect to ST-3 returns; whereas in terms of CENVAT Credit taken in the books of account, there is no excess availment. It is not the case of Revenue that the CENVAT Credit taken by the appellants in incorrect or such excess availment has arisen from ineligible CENVAT Credit taken by the appellants. Once, the credit has been allowed to the appellants without ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
