CENVAT credit on leased cars for employee transport was admissible before the 1 April 2011 amendment.

For the period before 1 April 2011, service tax paid on cars taken on lease for use by senior management employees could qualify as input service for CENVAT credit where the vehicles were used in the course of business to transport employees between home and office. Applying earlier Tribunal precedent, the text states that such employee transport, including for higher-category employees, was covered when tax had been duly discharged and the service supported business operations. On that basis, denial of credit was not sustainable, and the credit claim was allowed.

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Issues: Whether CENVAT credit of service tax paid on cars taken on lease for use by senior management employees was admissible as input service for the period prior to 1 April 2011.

Analysis: The appeal was decided by applying the earlier Tribunal view that services used for transporting employees, including higher-category employees, can qualify as input services when the tax has been duly discharged and the service is used in the course of business. The Tribunal noted that the cars were leased for the appellant's deployment and were used to enable senior officials to travel between their residences and office. Following the precedent, and noting that the relevant period preceded 1 April 2011, the denial of credit could not be sustained.

Conclusion: CENVAT credit was held admissible and the appeal was allowed in favour of the assessee.

Final Conclusion: The impugned order disallowing credit was set aside, and the appellant was granted the tax benefit claimed.

Ratio Decidendi: For the period prior to the 1 April 2011 amendment, service tax paid on leased vehicles used for employee transport in connection with business operations could qualify as input service for CENVAT credit.

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