2016 (11) TMI 989 - AT - Central Excise

Tribunal Upheld Revenue's Disallowance of Service Tax Credit: Lack of Disclosure Leads to Penalties

Jaya Hind Industries Ltd., Versus. Commissioner of Central Excise, Pune-l

The Tribunal upheld the Revenue's decision to disallow credit for service tax paid on 'outdoor catering services' and 'rent-a-cab service' due to lack of ... Cenvat Credit - Recovery of cost from employees - The appellants had claimed that the credit of outdoor catering services were availed by the appellant for making provision for food and beverages for employees of the appellant employed at its factory. This being requirement as per the provisions of the Factories Act, 1948. The appellant entered into a contract with outdoor caterer and a rent-a-cab service provider, however part of the cost was recovered by the appellant from its employees - Held that: - The sole ground for seeking relief is that the decision of the Hon'ble High Court of Bombay in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] is based on a concession given by the Counsel - the decision has not been based on a concession given by the Counsel of the manufacturer. The Hon'ble High Court has given its findings regarding the ratio laid down by CESTAT in the case of GTC Industries Ltd. The counsel merely accepted it. No concession was granted by the Counsel in that case. I find t the appellants have not disclosed at any level to the Revenue that they are recovering the said cost from the employees, view of Hon'ble High Court decision, the appeal is dismissed. Issues:1. Availment of credit for service tax paid on 'outdoor catering services' and 'rent-a-cab service.'2. Disallowance of credit based on a previous court decision.3. Imposition of penalty for interpretational issues related to Cenvat credit.Analysis:1. The appellant claimed credit for service tax paid on 'outdoor catering services' and 'rent-a-cab service' used for providing food and beverages to factory employees as per the Factories Act, 1948. While a portion of the cost was recovered from the employees, the Revenue disallowed the credit citing a previous court decision.2. The appellant argued that the Revenue's disallowance was based on a High Court decision involving Ultratech Cement Ltd., where a concession was given by the manufacturer's counsel. However, upon examination, it was found that the High Court's decision was not solely based on a concession but rather on the interpretation of CESTAT's ruling in the GTC Industries Ltd. case. The appellant failed to disclose the cost recovery from employees to the Revenue, leading to the dismissal of the appeal.3. The appellant contended that no penalty should be imposed as the issue was interpretational regarding the admissibility of Cenvat credit. The Tribunal noted that the High Court's decision was not influenced by a concession but by the legal interpretation of the law. As the appellant did not inform the Revenue about cost recovery from employees, the penalty was upheld, and the appeal was dismissed.In conclusion, the Tribunal upheld the Revenue's decision to disallow the credit based on legal interpretations and lack of disclosure by the appellant, leading to the dismissal of the appeal and the imposition of penalties.