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of <h1>Service tax demand on freight facilitation overturned; Cenvat credit allowed on factory services and employee training accommodation</h1> <h3>Dy. General Manager (Finance) Bharat Heavy Electricals Ltd. Versus Commissioner of Customs & Central Excise, Bhopal</h3> Dy. General Manager (Finance) Bharat Heavy Electricals Ltd. Versus Commissioner of Customs & Central Excise, Bhopal - TMI Issues:1. Whether the appellant is liable to pay service tax on the amount received for facilitating freight and insurance under the Goods Transport Agency (GTA) services.2. Whether the appellant is entitled to avail Cenvat Credit on input services for hiring of water tankers, mechanized canteen cleaning, catering services, and short term accommodation hotel services.Analysis:1. The appellant, engaged in transportation services, received income for freight and insurance. The department alleged a service tax liability on the appellant, which the appellant contested. The appellant argued that their activity falls under the negative list of non-taxable services and that they are not a Goods Transport Agency (GTA). The Tribunal observed that the appellant had discharged service tax under Reverse Charge Mechanism for services provided by GTAs. The Tribunal held that the appellant's transportation activity is non-taxable as per Section 66D of the Finance Act. Therefore, the demand for service tax was set aside.2. Regarding the denial of Cenvat Credit, the appellant contended that the services in question were received in compliance with the Factories Act. The appellant highlighted similar cases where demands were dropped for other units. The Tribunal noted the statutory requirements under the Factories Act for cleanliness, drinking water facilities, canteens, etc. The Tribunal held that services like hiring water tankers, canteen cleaning, and catering services qualify as eligible input services under Cenvat Credit Rules. The denial of Cenvat Credit amounting to Rs.9,17,113/- was deemed incorrect and set aside.In conclusion, the Tribunal allowed the appeal, setting aside the Order-in-Original and confirming that the appellant was not liable to pay service tax on the freight and insurance income. Additionally, the Tribunal held that the appellant was entitled to avail Cenvat Credit on the input services mentioned. The judgment was pronounced on 27/11/2024.
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