2019 (6) TMI 70 - AT - Service Tax

Tribunal grants Cenvat credit for rent-a-cab service used for guest car service

M/s Shoreline Hotels Pvt. Ltd. Versus Commissioner (Appeals) -I, CGST & Central Excise, Mumbai South

The Tribunal ruled in favor of the Appellant, allowing Cenvat credit for the rent-a-cab service used to provide car service to guests. The decision was ... CENVAT credit - input services - rent-a-cab service which admittedly was hired by the Appellant to provide car service to their guests - HELD THAT:- An identical issue came up for consideration before a coordinate bench of the Tribunal in the matter of Marvel Vinyls Ltd. vs. Commissioner of Central Excise, Indore [2016 (11) TMI 1126 - CESTAT NEW DELHI] and the Tribunal while deciding the issue in favour of Appellant therein held that the interpretation that motor vehicle are not capital goods for the service recipient cannot be appreciated inasmuch as motor vehicles are admittedly capital goods for the service provider in terms of Rule 2(a) of CCR, 2004. The appellant is entitled to the Cenvat credit on service tax paid on the aforesaid service - appeal allowed - decided in favor of appellant. Issues Involved:Whether the Appellant is entitled to Cenvat credit for rent-a-cab service hired to provide car service to guests.Analysis:The Appeal concerns the entitlement of the Appellant to Cenvat credit for utilizing rent-a-cab services to provide car service to guests. The Revenue contended that the professional services and rent-a-cab service did not have a nexus with the output services provided by the Appellant. A show cause notice was issued demanding the recovery of wrongly availed Cenvat Credit, which was confirmed by the Adjudicating authority. The 1st Appellate Authority set aside the demand for professional services but upheld the demand for rent-a-cab service, reducing the penalty. The Appellant argued that the motor vehicle used for renting is a capital good and, therefore, the input service credit cannot be denied. The Revenue reiterated the findings of the impugned order.Upon analyzing the argument, the Tribunal referred to the definition of 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004. An identical issue was considered by a coordinate bench in a previous case, Marvel Vinyls Ltd. vs. Commissioner of Central Excise, where it was held that motor vehicles are capital goods for the service provider. The Tribunal concluded that the Appellant is entitled to Cenvat credit for the service tax paid on the rent-a-cab service. Therefore, the impugned order was set aside, and the Appeal was allowed with consequential relief.In conclusion, the Tribunal ruled in favor of the Appellant, allowing the Cenvat credit for the rent-a-cab service utilized to provide car service to guests. The decision was based on the interpretation that motor vehicles are considered capital goods for the service provider, entitling the Appellant to the credit.