Tribunal allows Cenvat credit on catering services, except from employees, stresses timely disclosure

The Tribunal ruled in favor of the appellant, allowing Cenvat credit on outdoor catering services except for the portion collected from employees. The decision emphasized the significance of consistent disclosure in monthly returns to determine the time bar on demands. The Tribunal ordered the dropping of the demand beyond one year, re-quantification of the normal period demand based on catering charges collected from employees, payment of interest on the re-quantified amount if delayed, and waiver of penalty.

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Issues:
Admissibility of Cenvat credit on outdoor catering services provided in the factory premises.

Analysis:
The appeal challenged the Order-in-Appeal upholding the rejection of the appellant's appeal regarding Cenvat credit on outdoor catering services. The appellant argued that prior to 1/4/2011, outdoor catering services for personal use were excluded from the definition of input service, making Cenvat credit legally allowable. They cited a judgment by the Tribunal and their own case where Cenvat credit was allowed. The appellant contended that the show cause notice was time-barred as they had consistently disclosed information related to Cenvat credit in their monthly returns. The appellant also mentioned collecting a small amount from employees for catering services. On the other hand, the Revenue argued that the appellant was not entitled to Cenvat credit as they collected service charges from workers. They claimed the appellant suppressed facts, justifying the invocation of the extended period in the notice. The Revenue requested verification of the 3% collection mentioned by the appellant.

The Tribunal considered the submissions and reviewed the records. Referring to previous judgments, the Tribunal concluded that the appellant was entitled to Cenvat credit for service tax paid on outdoor catering services, except for the 3% amount collected from employees. Regarding the time bar, the Tribunal found that the appellant consistently disclosed details of Cenvat credit in their monthly returns, making the demand beyond one year from the show cause notice unsustainable. The Tribunal ordered the dropping of the demand beyond one year, re-quantification of the normal period demand based on catering charges collected from employees, payment of interest on the re-quantified amount if delayed, and waiver of penalty. The appeal was disposed of accordingly.

In summary, the Tribunal ruled in favor of the appellant regarding the admissibility of Cenvat credit on outdoor catering services, except for the portion collected from employees. The decision highlighted the importance of consistent disclosure in monthly returns for determining the time bar on demands.

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