2024 (5) TMI 1196 - AT - Service Tax

Cenvat credit allowed on hotel charges and event management services for promotional activities under Rule 9(5)

CESTAT Allahabad allowed the appeal regarding Cenvat credit on service tax for hotel charges and event management services under Rule 9(5) of CENVAT ... Entitlement of Cenvat credit on service tax for hotel charges and event management services - GTA services, under Rule 9(5) of the CENVAT Credit Rules 2004 - HELD THAT:- It is the case of the appellant that these services were used by them for organizing events for promotion/planning strategies for their sales activities. Authorities below have ignored the said submissions and have disallowed the credit by taking the view that these were not utilized directly or indirectly in relation to manufacture of finished products by doing so they have ignored the inclusive part of the definition whereby services received for sales promotion are defined to be eligible as input services for cenvat credit. Similar view has been held by the Tribunal in the case of Honda Motorcycles & Scooter India Pvt Ltd.[2019 (4) TMI 927 - CESTAT CHANDIGARH]. Thus, I do not find any merits in the impugned order and the same is set aside. Appeal is allowed. Issues involved: The issue involves the admissibility of CENVAT credit on service tax for hotel charges and event management services, as well as GTA services, under Rule 9(5) of the CENVAT Credit Rules 2004.Admissibility of CENVAT credit on hotel charges/event services: The appellant, engaged in biscuit manufacturing, availed CENVAT credit on services like hotel charges and recreational activities at hotels. A show cause notice was issued disallowing the credit, leading to penalties. The appeal was partly allowed, upholding the demand for event management services but remanding GTA services. The appellant argued that event management services were used for sales promotion, citing relevant decisions. The Revenue representative reiterated the findings of the impugned order.Interpretation of Rule 2(l) of CENVAT Credit Rules: Rule 2(l) defines input service as services used directly or indirectly in relation to the manufacture of final products. The appellant claimed that event management services were used for sales promotion and planning strategies for sales activities. The Tribunal's decision in Honda Motorcycles & Scooter India Pvt Ltd. supported the admissibility of such services as input services. The Bombay High Court's decision in Axix Bank Ltd. also emphasized the importance of event management services for business promotion activities.Conclusion: The Tribunal found no merit in the impugned order and set it aside, allowing the appeal. The appellant's argument regarding the admissibility of event management services for CENVAT credit was upheld based on the inclusive definition of input services under Rule 2(l) of the CENVAT Credit Rules.