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 Credit Rules 2004. The appellant claimed these services were used for organizing promotional events and sales activities. Lower authorities disallowed the credit, arguing services weren't directly/indirectly related to manufacturing finished products. The Tribunal held that services for sales promotion qualify as eligible input services for Cenvat credit, citing Honda Motorcycles precedent. The impugned order was set aside and appeal allowed.

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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.

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