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ST - Rent-a-cab service and Travel Agent service is used by employees for travelling and meeting customers which is core activity for fetching business for appellant - credit is admissible: CESTAT

By TIOL News Service

MUMBAI, NOV 02, 2017: THE appellant is Axis Bank Ltd.

The issue is admissibility or otherwise of CENVAT Credit on Rent-a-Cab Service and Travel Agent Service.

The adjudicating authority denied the credit on the ground that it is for personal use of the employees .

In appeal before the CESTAT, the appellant submitted that the Rent-a-Cab service is used for meeting of their customers by the branch employees for business purpose and for transportation of employees to railway station/other location/to the business premises from the bank. Therefore, it could not be said that the Rent-a-cab services is used for personal purpose of the employee but the entire services is used in relation to the business activity of the appellant.

As regard travel agent service it is submitted that these services are used for booking of tickets for business travel of employees in relation to the provision of output services and such employees are engaged in the business of the company; that the expenditure on account of both the services were booked as business expenditure in the books of the appellant which stand reflected in the value of the output service.

Reliance is placed on the decisions in Stanzen Toyotetsu India (P) Ltd. 2009-TIOL-697-CESTAT-BANG, 2011-TIOL-866-HC-KAR-ST; Cable Corporation of India Ltd. 2008-TIOL-1180-CESTAT-MUM; Hindalco Industries Ltd. 2016-TIOL-3173-CESTAT-MUM; Sundaram Business Services Ltd. 2016-TIOL-2261-CESTAT-MAD.

The AR supported the order of the original authority.

The Bench observed -

"4. … as explained by the appellant the facts of the case which is not in dispute that both the services were used by the employees of the company for the purpose of activity related to the business activity of the bank. As regard the Rent-a-cab service, it is used by the employees for meeting with the customers which is a core activity for fetching the business for the appellant. As regard the travel agent service the employees of the appellant have to travel different parts of the country in relation to the business activity of the appellant. For the purpose of travelling, the travel agent service for booking the tickets is essential service for conducting the business of the appellant. The issue is no longer res integra as the same has been consistently decided that the CENVAT credit in respect of travel agent service and Rent-a-Cab service is admissible…."

After extracting the judgments cited by the appellant, the CESTAT held that CENVAT credit in respect of Rent-a-cab service and Travel agent service is admissible more so since the period involved is prior to 1.4.2011 when by amendment in the definition of input service, certain services were excluded.

Concluding that there is no bar in allowing the credit on the subject services, the impugned order was set aside and the appeals were allowed.

(See 2017-TIOL-3867-CESTAT-MUM)


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