2013 (12) TMI 327 - AT - Service Tax

Limitations on Cenvat credit for coaching services clarified in recent judgment

M/s BANSAL CLASSES Versus COMMISSIONER OF CUSTOM AND EXCISE

The judgment concluded that services like catering, photography, and tents used for celebrations after coaching sessions were not admissible for Cenvat ... Denial of CENVAT Credit - Commercial training or coaching services - Availment of Cenvat credit of service tax paid on catering , photography, tent (mandap keeper), maintenance & repairs (motor vehicles), rent for hiring examination hall and travelling expenses - Held that:- as regards catering and photography service, tents these services are used by the appellants to encourage the students who succeeded in coaching. This is an admitted case that these services have been used after commercial training or coaching is over. The celebrations are organized by the appellants during the academic sessions to encourage the existing students and to motivate the new students. During these celebrations students who have done exceptionally well are awarded so that they set an example for the other students. In these celebrations that service of catering and photography, tents are used by the appellants. I find that these activities takes place after the students passed the commercial training or coaching session conducted by the appellants. The appellants are paying service tax under the output service of commercial coaching or training. Once the student passed their coaching classes these activities of catering and photography and tent services cannot be said to have been used to provide output service. Similarly, the maintenance and repair of the motor vehicles is also an activity which is used by the appellants during the course of their business and there is nothing on record to say that these maintenance and repairs have any nexus to commercial training or coaching. Therefore, the Cenvat credit in respect of this service has rightly been denied by the Commissioner (Appeals). Similarly the travelling expenses incurred by the appellants for the business tours cannot be related to provision of commercial coaching or training and lower authorities have rightly held that Cenvat credit in respect of these services is also not admissible. Appellants are conducting examination of students under coaching to enhance their performance. For this purpose i.e. conducting of examination of the students, examination hall is hired by them and since renting of immovable property is a taxable service, service tax paid on renting of the examination hall will be admissible to the assessee as the Cenvat credit, as commercial coaching or training. Accordingly, I hold that the appellants are eligible for the Cenvat credit in respect of service tax paid on hiring of examination hall on rent. In view of the above, I hold that appellants are eligible for Cenvat credit in respect of hiring of hall and in respect of other activities the Cenvat credit is not admissible to the appellants - Decided partly in favour of assessee. Issues involved:1. Admissibility of Cenvat credit on various input services used by the appellants.2. Nexus of input services with the output service of commercial coaching or training.Detailed Analysis:Issue 1: The appellants availed Cenvat credit on services like catering, photography, tent, maintenance & repairs of motor vehicles, rent for hiring examination hall, and traveling expenses. The department contended that these services did not qualify as input services under Rule 2(I) of Cenvat Credit Rules. A Show Cause Notice was issued, demanding service tax, interest, and penalties. The Order-in-Original was challenged before the Commissioner (Appeals).Issue 2: The appellant argued that the services were used for providing output services. The catering and photography services were utilized for organizing orientation programs for new students. The examination hall was hired for conducting exams essential for coaching. The maintenance of vehicles was for transporting students, and traveling expenses were also claimed. The Revenue argued that these services lacked nexus with commercial coaching or training output services.The judgment held that services like catering, photography, and tents used for celebrations after coaching sessions were not admissible for Cenvat credit. However, hiring an examination hall for conducting student exams was considered admissible as it directly related to the output service of commercial coaching or training. Maintenance and repair of vehicles, as well as traveling expenses, were deemed unrelated to coaching services, thus not eligible for Cenvat credit. The appeal was partly allowed, with Cenvat credit granted only for hiring the examination hall.