By TIOL News Service

MUMBAI, SEPT 07, 2017: THE appellants are in appeal against demand of reversal of credit on manpower supply service and demand of interest and penalty on the credit reversed on rent a cab service.

Before the CESTAT, the appellant submitted that the matter pertains to the period 2008 to 2012 and which is before the amendment in the definition of "input service". That manpower supply has been used to provide driver and office boy in the factory of the appellant; that they had availed CENVATcredit on rent-a-cab service but since they had recovered the amount paid for such service from the employees except the service tax component they had taken credit but reversed the same when it was pointed out. However, since the said credit was not utilized, no interest could be demanded and penalty be imposed.

The AR reiterated the stand taken by the lower authorities.

The Bench observed -

++ The appellant had before the adjudicating authority as well as the Commissioner (Appeals) stated the said manpower supply service has been used for assisting official in the factory. So long as these activities are related to the factory premises, and the official related to the factory, credit cannot be denied. The definition of "input service" is very wide and would cover the said service. The appeal on this count is allowed.

++ It is seen that the appellant had collected the entire rent from the personnel who used the said service. The appellant only bore the burden of service tax paid therein thus clearly the service was not availed by appellants but their employees for personal use. This is clear sign of intention to evade duty and accommodate their employees. If the burden of actual charge paid for rent a cab service and payment is made by the employees it is obviously used in personal capacity. In these circumstances, availing credit amount to fraud . The penalty is therefore rightly imposed on the appellant. The appeal on this count is dismissed.

The appeal was partly allowed.

(See 2017-TIOL-3246-CESTAT-MUM)