2009 (7) TMI 562 - AT - Service Tax

Tribunal Upholds Cenvat Credit for Mobile, Rent-a-cab, Commission, and Courier Services

The Tribunal upheld the decision to allow Cenvat credit on mobile services, Rent-a-cab services, commission on sales, and courier services. It found that ... Input services - Cenvat credit - used in or in relation to the manufacture - sales promotion - business activitiesInput services - Cenvat credit - used in or in relation to the manufacture - sales promotion - business activities - Admissibility of Cenvat credit of service tax paid on mobile services, Rent a cab services, commission on sales and courier services - HELD THAT: - The Tribunal considered whether the four categories of services fell within the definition of input services and thus entitled to Cenvat credit. Relying on the inclusive definition of input services (which expressly includes services used for setting up, modernization, sales promotion, business activities, storage up to place of removal, procurement of inputs and related activities), the Tribunal held that commission on sales is relatable to sales promotion and therefore covered. Mobile services were allowed in view of earlier Tribunal decisions cited (Grasim Industries and Saurashtra Chemicals Ltd.). Rent a cab services were held to be covered because they facilitate transport of employees to the factory and are used indirectly in or in relation to manufacture and as part of business activities, following the reasoning in Cable Corporation of India Ltd. Courier services were accepted as used in connection with the company's business activities. The Commissioner (Appeals)'s finding that these services were used in connection with the business and thus admissible as input services was held to be legal, proper and reasonable, and no contrary authority applying a narrower test of 'in or in relation to manufacture' displaced the inclusive rule applied here.Cenvat credit for service tax paid on mobile services, Rent a cab services, commission on sales and courier services is allowable; the Commissioner (Appeals) order is upheld.Final Conclusion: The appeal is dismissed and the order of the Commissioner (Appeals) allowing Cenvat credit on the specified services is affirmed. Issues:- Appeal against allowing Cenvat credit of service tax on mobile services, Rent-a-cab services, commission on sales, and courier services.Analysis:1. Mobile Services: The Department argued that these services were not used in or in relation to the manufacture of the final product. However, the authorized representative contended that mobile services qualify as input services based on precedents like Grasim Industries and Saurashtra Chemicals Ltd. The Tribunal agreed, citing these cases and allowed the credit on service tax paid on mobile services.2. Rent-a-cab Services: The authorized representative argued that Rent-a-cab services were used in relation to transporting employees involved in manufacturing activities. Referring to the Cable Corpn. of India Ltd. case, it was established that such services indirectly contribute to manufacturing and promoting business efficiency. The Tribunal upheld this argument and allowed the credit on Rent-a-cab services.3. Commission on Sales: The representative asserted that commission on sales falls under 'sales promotion' expenses, which are covered under the definition of input services. As a result, the Tribunal agreed that commission on sales should be allowed as a credit.4. Courier Services: The Commissioner (Appeals) had already allowed the credit on courier services, stating they were used in connection with the business activities of the company. The Tribunal found this decision reasonable and legally sound, affirming that courier services, along with the other three services, were indeed utilized in connection with the company's business activities.5. Final Decision: After considering the arguments and precedents presented by both sides, the Tribunal concluded that there was no valid reason to overturn the order of the Commissioner (Appeals). Consequently, the Department's appeal was rejected, and the decision to allow Cenvat credit on the specified services was upheld.