Resolving CENVAT Credit Dispute: Outdoor Catering Service Eligibility

The case involved a dispute over the availability of CENVAT Credit on service tax paid for "outdoor catering service." Due to conflicting views in different Tribunal cases, the matter was referred to a Larger Bench for resolution. The appellant argued for credit based on a previous judgment supporting eligibility for canteen services within factory premises. However, another Tribunal case provided a contrary perspective post-amendment to the CENVAT Credit Rules. The referral to a Larger Bench aimed to address the disparity and establish a consistent interpretation of the law on this issue, emphasizing the need for clarity in the application of CENVAT credit rules.

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Issues involved:
Availability of CENVAT Credit on service tax paid for "outdoor catering service" - Need for referral to a Larger Bench due to conflicting views in different Tribunal cases.

Analysis:
The case revolves around the availability of CENVAT Credit on the Service Tax paid for "outdoor catering service." The appellant, an industrial unit, engaged in manufacturing/service provision, availed the services of outdoor catering for their employees and claimed CENVAT credit on the Service Tax charged. The Department contends that post the amendment to Rule 2(1) of CENVAT Credit Rules, 2004, the credit for "outdoor catering service" cannot be availed. This disagreement forms the crux of the issue.

The appellant's counsel relies on a previous Tribunal judgment in the case of M/s. Hindustan Coca Cola Beverages Pvt. Ltd., where it was held that canteen services provided within factory premises, in compliance with the Factories Act, 1948, are eligible for credit on service tax paid. This judgment supports the appellant's position regarding the availability of CENVAT credit for catering services.

Contrarily, another Tribunal case involving AET Laboratories Pvt. Ltd. presented a different perspective. In this case, post the amendment to Rule 2(1) of CCR, 2004, it was concluded that CENVAT credit cannot be allowed for "outdoor catering service." The divergence in views between these two Tribunal cases highlights the need for a resolution.

Given the conflicting decisions in different Tribunal cases on the same issue, the Member (J) finds it appropriate to refer the matter to the President for the constitution of a Larger Bench. The objective is to address the disparity and establish a coherent interpretation of the law regarding the availability of CENVAT Credit on Service Tax paid for "outdoor catering service." The order was pronounced on 24-7-2017, emphasizing the significance of resolving this legal ambiguity through a Larger Bench.

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