Appellate Tribunal allows input credit for organizing company events boosting morale and productivity

The Appellate Tribunal CESTAT Chandigarh, in a judgment by Hon'ble Mr. Ashok Jindal, allowed the appeal regarding the denial of input service credit for organizing a Family Day function. The Tribunal held that services availed for such events are eligible for credit if related to the business activity. Relying on a precedent, the Tribunal concluded that the Family Day function aimed at boosting morale and productivity of workers was linked to the business, entitling the appellant to claim credit for event management, security, and Pandal & Shamiana services. The impugned order was set aside, emphasizing the importance of aligning credit eligibility with business activities.

---

---

Issues: Denial of input service credit for organizing Family Day function under various service categories.

In the judgment delivered by Hon'ble Mr. Ashok Jindal, Member (Judicial) of the Appellate Tribunal CESTAT Chandigarh, the main issue revolved around the denial of input service credit to the appellant for organizing a Family Day function. The denial was based on the categorization of the services utilized for the event, including event management services, security services, insurance services, and Pandal & shamiana services, as not qualifying under Rule 2(l) of the Cenvat Credit Rules, 2004.

Upon hearing the parties and considering their submissions, the Tribunal referred to a precedent set by the Hon'ble Apex Court in the case of M/s Ultratech Cement Ltd. The court held that any services availed by the manufacturer of excisable goods in the course of their business are eligible for input services credit. In this case, the Family Day function was organized for the workers employed in the appellant's factory to boost their morale and productivity. The Tribunal concluded that the Family Day function was related to the business activity of the appellant, thereby entitling them to avail Cenvat credit for the event management service, security service, and Pandal & Shamiana services utilized for the function.

Consequently, the impugned order denying the input service credit was set aside, and the appeal was allowed with any consequential relief deemed necessary. The judgment highlights the importance of interpreting the scope of input service credit eligibility in alignment with the business activities and objectives of the appellant, ensuring a fair and just application of the Cenvat Credit Rules, 2004.

---