2009 (10) TMI 394 - AT - Service Tax

Tribunal Upholds Disallowance of Input Credit for Event Management Services: Emphasis on Business Activities

HINDUSTAN ZINC LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

The Tribunal upheld the decision of the Commissioner (Appeals) to disallow input service credit for Event Management services in the case. It emphasized ... Event Management Services – Input Services – The appellants are engaged in the manufacture of Zinc Lead, Sulphuric Acid and copper. The appellants availed input service credit of Rs.5,58,961/- on the basis of invoice issued by M/s. Innuenodo Communication in respect of service tax paid on “Event Management service” provided to the appellants in connection with celebration of expansion of their Chanderia plant. Original authority disallowed the credit and confirmed the demand of Cenvat credit of Rs.5,58,961/- and imposed penalty of Rs.10,000/- under Rule 15(3) of the Cenvat Credit Rules, 2004 along with interest. In this case (Tri-Del) held that no profile of event produced to substantiate that event organized for sale promotion/advertisement thus credit not eligible. The appeal filed by the appellant rejected. Issues:- Disallowance of input service credit for Event Management service- Interpretation of 'activities relating to business' under Cenvat Credit Rules, 2004- Application of precedents from Income-tax Act to Cenvat Credit RulesIssue 1: Disallowance of input service credit for Event Management serviceThe case involved the appellant availing input service credit for Event Management service related to the celebration of their plant expansion. The original authority disallowed the credit, leading to a demand for Cenvat credit and imposition of a penalty. The Commissioner (Appeals) upheld this decision.Issue 2: Interpretation of 'activities relating to business' under Cenvat Credit Rules, 2004The appellant argued that the Event Management service was utilized for business activities, citing precedents and the definition of 'input service' under the Rules. The Tribunal analyzed the term 'business' as a broad concept and emphasized that the definition of 'input services' includes 'activities relating to business,' with no limitation on the scope of such activities. The Tribunal highlighted that the term 'such as' in the definition is illustrative, indicating a wide interpretation of 'input service.'Issue 3: Application of precedents from Income-tax Act to Cenvat Credit RulesThe appellant relied on High Court decisions under the Income-tax Act to support their claim that expenses related to business activities, such as celebrations, should be considered input services. However, the Tribunal differentiated between the Income-tax Act and Cenvat Credit Rules, emphasizing the need for evidence to establish that the service was rendered for business purposes. The Tribunal noted that the Event Management service in this case was provided for employee entertainment, lacking evidence of being for sales promotion or advertisement.In conclusion, the Tribunal rejected the appeal, upholding the Commissioner (Appeals) decision. The judgment emphasized the requirement for evidence to link services to business activities under the Cenvat Credit Rules, distinguishing between mere entertainment and activities related to business promotion or advertisement.