CESTAT Chennai: Input Service Credit Allowed for Management Consultancy, Denied for Rent-a-cab

The Appellate Tribunal CESTAT CHENNAI addressed the denial of CENVAT credit to applicants engaged in steel casting manufacturing for various input services. The Tribunal allowed credit for Management Consultancy Service fees paid to the Chairman but denied credit for Rent-a-cab service expenses recovered from employees. A pre-deposit of Rs.10,000 was ordered, staying the remaining dues pending appeal. Compliance was required by 13.6.2013.

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Issues:
- Denial of CENVAT credit for input services including Management, Maintenance and Repair Service of helicopter, Rent-a-cab service, and Management and Consultancy Service.

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved the denial of CENVAT credit to the applicants engaged in the manufacture of steel casting for various input services. The demand raised amounted to Rs.18,66,451.00 along with interest and penalty. The specific input services in question were the Management, Maintenance and Repair Service of a helicopter owned by the company, Rent-a-cab service, and Management and Consultancy Service.

Upon hearing both sides and examining the records, the Tribunal noted that a similar issue had been addressed in the applicant's own case previously. In that case, waiver of dues was granted for services other than Rent-a-cab service. Regarding Rent-a-cab service, since the amount was recovered from employees, the Tribunal found no basis for claiming CENVAT credit on that amount. However, for Management Consultancy Service provided by the Chairman, the Tribunal considered the fee collected for financial management and policy decisions, with service tax paid. The absence of a separate agreement with the Chairman was highlighted by the counsel.

Taking into account the previous order and the recovery of a portion of expenses on Rent-a-Cab from employees, the Tribunal directed the applicant to make a pre-deposit of Rs.10,000 within 4 weeks. Upon this deposit, the pre-deposit of the remaining dues from the impugned order was stayed during the appeal process. The compliance deadline was set for reporting on 13.6.2013, with the decision being dictated and pronounced in open court.

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