ST - Rent-a-cab service is an Input service as motor vehicle is capital goods for service provider: CESTAT
By TIOL News Service
MUMBAI, AUG 01, 2017: THE issue involved is that whether the respondent assessee is entitled for CENVAT Credit in respect of Rent-a-Cab Service and consequential refund of the same under Rule 5 of CCR, 2004.
The AR submitted that the Commissioner (Appeals) had wrongly allowed the refund in respect of Rent-a-Cab Service for the reason that Rent-a-Cab service is specifically excluded from the definition of "input service".
The respondent assessee submitted that although the Rent-a-Cab service is excluded from the definition of input service, the exclusion is a conditioned one inasmuch as only when the motor vehicle by which Rent-a-Cab service is provided is not capital goods, for the service provider, then only it is excluded from the input service. Reliance is placed on the Tribunal decision in M/s. Marvel Vinyls Ltd - 2016-TIOL-3071-CESTAT-DEL.
The Bench extracted the exclusion carved out in rule 2(l) of CCR, 2004 and which reads -
"(B) Services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods;"
And observed -
"…As per the plain reading of the above entry, it can be seen that only those renting of motor vehicle services are excluded in respect of which motor vehicle used is not capital goods. On going through the definition of capital goods, I find that the motor vehicle used for providing renting services is covered under the definition of capital goods, therefore, the services in the present case provided by way of renting of motor vehicle. The motor vehicle is capital goods, therefore the Rent-a-Cab service perse is not excluded from the definition of input service…"
Noting that identical issue has been considered by the Tribunal in the case of M/s Marvel Vinyls Ltd (supra) and wherein the coordinate bench has held that motor vehicle is capital goods for provider of output service and, therefore, credit is admissible, the Revenue appeals were dismissed.
(See 2017-TIOL-2696-CESTAT-MUM )