Tribunal overturns denial of CENVAT credit on Service Tax for employee accommodation.

The Tribunal allowed the appeal, overturning the Commissioner (Appeals) order, as the denial of CENVAT credit on Service Tax for residential accommodation provided to an employee by a service provider was unjustified. The Tribunal clarified that the liability for tax payment falls on the service provider, not the recipient, and emphasized the necessity of establishing a nexus between input service and the business of the assessee.

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Issues:
Denial of CENVAT credit on Service Tax for Business Support Service due to rent paid for employee's residence not being taxable.

Analysis:
1. The appellant contested the denial of CENVAT credit on Service Tax for Business Support Service, arguing that the rent paid for an employee's residence is admissible as per the pre-2011 amended definition of input service related to business activities. The appellant relied on various legal precedents to support their contention, emphasizing the jurisdictional distinction between the appellant and the service provider.

2. The respondent Department supported the Commissioner (Appeals) order, citing a Bombay High Court case to distinguish expenses not covered under "relating to the business" expression. The respondent emphasized the need to establish a nexus between input service and the business of the assessee, along with the definition of support service under the Finance Act 1994.

3. The Tribunal examined the case record and found that the appellant engaged Dr. Puri through a secondment agreement with ABMCPL, where all costs, including salary and residential accommodation, were borne by the appellant. The Tribunal clarified that no employee-employer relationship existed between the appellant and Dr. Puri, as the services were provided by ABMCPL. The denial of CENVAT credit on rent for residential accommodation was justified based on the non-payment of Service Tax to the property owner.

4. The Tribunal reviewed the sample invoice provided by the appellant, which indicated the expenditure for providing accommodation to Dr. Puri, inclusive of rent and ancillary expenses. Despite the Service Tax component on residential accommodation, the Tribunal noted the inconsistency in objecting to the tax collection on salary payment. The Tribunal emphasized that the liability for tax payment falls on the service provider, not the recipient, and allowed the appeal, setting aside the Commissioner (Appeals) order.

5. In conclusion, the Tribunal allowed the appeal, overturning the Commissioner (Appeals) order dated 20-02-2018, based on the lack of justification for denying the appellant's CENVAT credit on Service Tax for the residential accommodation provided to Dr. Puri by ABMCPL.

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