2009 (1) TMI 146 - AT - Service Tax

Tribunal upholds Cenvat credit for rent-a-cab, mobile, car repair and photography as input services under Cenvat Credit Rules

CESTAT allowed Cenvat credit for rent-a-cab, cellular telephone, car repair/maintenance and photography services as input services used directly or ... Cenvat credit demand - service tax credit in respect of 'Rent a cab services', 'cellular telephone services', 'repair of car/motor vehicle service' and 'photography services' - eligibility for service tax credit for the mentioned services under the definition of 'input services' - Rent-a-cab service used in relation to manufacture - imposing penalty - HELD THAT:- Since the repair and maintenance of service is availed by the Respondents in respect of fleet of cars/motor vehicles owned by them for their officer's use for the company's work and since the Respondent's claim that the 'photography service' has been availed by them only in relation to their manufacturing activity, has not been controverted by the Revenue, both these services have to be treated as- 'Services used directly or indirectly, in or in relation to manufacture of final products ...' or 'in relation to activities relating to business and hence the same are covered by the definition of 'input service' as given in Rule 2(1) ibid. As held by this Tribunal in case of Victor Gaskets India Ltd.[2008 (2) TMI 61 - CESTAT MUMBAI], the expression- 'in relation to' in the definition of 'input service' has to be given a wide connotation and the illustrative list of activities relating to business in the inclusive definition of 'input service' is not exhaustive, as the expression 'such as' follows the expression- 'activities relating to business'. No infirmity in the impugned order - Revenue's appeals are dismissed. Issues:Revenue's appeal against the order-in-appeal setting aside Cenvat credit demands for various services like 'Rent a cab services', 'cellular telephone services', 'repair of car/motor vehicle service', and 'photography services'.Analysis:The main point of contention in this case was whether the Respondents were eligible for service tax credit for the mentioned services under the definition of 'input services' in the Cenvat Credit Rules, 2004. The Revenue argued that these services were not directly or indirectly used in or in relation to the manufacture of cement. On the other hand, the Respondent contended that these services were indeed utilized in their manufacturing and business activities.The Departmental Representative highlighted that the Respondents failed to establish how the services were linked to the manufacturing process or clearance of final products. The lack of documentary evidence supporting the use of these services for business purposes was a key argument put forth by the Revenue.In response, the Respondent's counsel provided detailed explanations for each service. They demonstrated how services like 'Rent a cab (Taxi hire)', 'Photography', 'Maintenance and repair of cars/Motor vehicles', and 'cellular/mobile telephone service' were integral to their manufacturing and business operations. The counsel referenced relevant Tribunal judgments to support their position, emphasizing the broad interpretation of the term 'in relation to' in the context of input services.Upon careful consideration of both sides' arguments and the records, the Tribunal found that the Respondents had adequately explained the use of the services in relation to their manufacturing activities. Citing previous Tribunal judgments, the Tribunal ruled in favor of the Respondent, stating that services like mobile phone usage, rent-a-cab services, repair and maintenance of vehicles, and photography services qualified as input services under the Cenvat Credit Rules, 2004.Ultimately, the Tribunal dismissed the Revenue's appeals, affirming the impugned order that set aside the Cenvat credit demands and penalties imposed on the Respondent. The decision was based on the established link between the services in question and the manufacturing or business activities of the Respondent, as supported by relevant legal precedents.In conclusion, the judgment provided a comprehensive analysis of each service in dispute, clarifying the eligibility of the Respondent for service tax credit under the Cenvat Credit Rules, 2004. The decision underscored the importance of demonstrating the direct or indirect use of services in manufacturing processes and business operations to qualify for input service credits.