Department's Appeal Partially Allowed on Rent-A-Cab Services Post 01.04.2011

The Department's appeal was partly allowed by disallowing credit for rent-a-cab services post-01.04.2011. The Tribunal upheld credit for canteen services and justified the non-imposition of a penalty for township security services. The impugned order was modified to reflect the decision, granting consequential reliefs accordingly.

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Issues:
Appeal against disallowed credit on various input services.

Analysis:
The Department filed an appeal against the Commissioner (Appeals) order disallowing credit on input services like Township security service, Transport services, Canteen Services, and professional/consultancy services. The original authority confirmed the demand for all services, but the Commissioner (Appeals) allowed credit for all services except Township security services. The Department appealed the credit allowed for Transport services, canteen services, and consultancy services, and the non-imposition of penalty for disallowed township services.

The Department argued that canteen services do not qualify as input services as the service tax amount was borne by the contractor, not the respondent. They contended that after 01.04.2011, rent-a-cab services were excluded from input services and, without evidence of statutory obligations, were not eligible for credit. The Department also believed that irregular credit availed should have led to the imposition of a penalty for township security services.

In response, the respondent's counsel highlighted that most demands were before 01.04.2011, making Township and Consultancy services eligible for credit. They agreed that post-01.04.2011, rent-a-cab services were not eligible for credit. Regarding canteen services, they argued that the service tax was paid by the respondent, and the canteen was maintained in compliance with the Factories Act, 1948.

The Tribunal found that rent-a-cab services post-01.04.2011 were not eligible for credit, disallowing &8377; 14,265. The Tribunal also upheld the credit for canteen services, as the service tax was paid by the respondent and only a negligible amount was collected from employees. The Commissioner (Appeals) was justified in not imposing a penalty for township security services, as they were availed before 01.04.2011 when most services were eligible for credit under the broad definition of input services.

Conclusively, the Department's appeal was partly allowed by disallowing credit for rent-a-cab services post-01.04.2011. The impugned order was modified to reflect this decision, with consequential reliefs granted accordingly.

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