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CX - Rule 2(l) - ST paid on services of setting up of mandap in factory for celebrating Dussera festival is not eligible to be held as credit as this seems to be not connected with the business of the appellant: CESTAT

By TIOL News Service

MUMABI, DEC 04, 2015: CENVAT credit of service tax paid has been denied on the following services -

(a) Agency Charges

(b) Tour Operator Service

(c) Other Welfare Expenses

(d) Catering services (On the amount collected by the appellant from their employees)

The assessee is before the CESTAT against the o-in-a dated 29.03.2010.

The findings of the Bench are as below -

+ "Agency charges" - law has been settled by the judgement of the High Court of Gujarat in the case of CCE vs. Mundra Port & Special Economic Zone Ltd. wherein it was clearly held that the services rendered by the cargo handling services and the service tax paid thereof is eligible to be availed as CENVAT credit.

+ "Tour operator" - for transportation of their employees to the residence and vice versa . High Court of Karnataka in the case of CCE v. Stanzen Toyotetsu India (P) Ltd. - 2011-TIOL-866-HC-KAR-ST has clearly held that these services are for transportation of employees and credit of tax paid is eligible as input service. Since the issue has already been settled, CENVAT credit of service tax paid on tour operator service is allowed.

+ "Other welfare service" - service tax paid on the services of purchase of gift and setting up of mandap in the factory premises for celebrating Dussera festival is not eligible to be held as credit as this seems to be not connected with the business of the appellant, hence the CENVAT credit on this services is upheld as incorrectly availed and needs to be reversed by the appellant.

+ "Catering services" - High Court of Bombay in the case of Ultratech Cement - 2010-TIOL-745-HC-MUM-ST has already settled the issue that the service tax paid on the employees' contribution cannot be availed as CENVAT credit.

Conclusion:

++ CENVAT credit of service tax paid on "agency service" and "tour operator service" are allowed and the service tax credit on "other welfare charges" and "catering charges" are denied.

++ Appellant is directed to reverse the said amount along with interest, in accordance with law.

++ Since the issue was agitated in various forums, no reason to visit the appellant with penalty.

Appeal disposed of.

In passing: Toyota Kirloskar Motor Pvt. Ltd. - 2011-TIOL-941-HC-KAR-ST

Held : Expenses incurred towards putting up Shamiyana, photography services, etc., for celebrating Karnataka Rajyotsava day do fall within the activities relating to business and consequently input service and the service tax paid on such service can be availed as CENVAT credit by the assessee.

(See 2016-TIOL-27-CESTAT-MUM)


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