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of <h1>Cenvat credit on input services and cancellation forfeiture clarified; credit allowed and forfeiture treated as compensation, appeal allowed.</h1> Cenvat credit on input services such as club membership, catering and cab services is held allowable where Revenue fails to establish personal consumption ... Cenvat credit on input services - forfeiture / cancellation charges as consideration - burden of proof on Revenue to establish personal consumption - exclusions in Rule 2(1) of service tax / definition provisions - HELD THAT:- As regarding cenvat credit availed inputs services such as club membership fee, catering service and cab services, this issue is no longer res integra and is squarely covered by the decision of CCE vs. Sony Pictures [2024 (6) TMI 1109 - BOMBAY HIGH COURT] While considering the issue, Tribunal in the mater of Sony Pictures Networks India Pvt. Ltd. vs. CST, Mumbai [2019 (12) TMI 1171 - CESTAT MUMBAI] Fact being so, denial of cenvat credit as ineligible is not supported by any admissible evidence that these services are not utilised for the output services and cannot be denied. With regard to the forfeiture amount, which is received as compensation towards cancellation of bookings by the customers, this issue was considered by this Tribunal in the case of TATA Housing Dev. Co. Ltd. vs. CGST [2025 (5) TMI 1019 - CESTAT BANGALORE] and by following the Circular No.214/1/23 dated 28.2.2023 it is held that the amount received is only a compensation and not consideration for any service rendered by the appellant. Hence, demand on this count is also set aside. In view of the above discussions, the impugned order is set aside and the Appeal is allowed. Issues: (i) Whether cenvat credit availed on club/membership fees, outdoor catering services and rent-a-cab services is ineligible and exigible for the period July 2012 to September 2013; (ii) Whether amounts forfeited/received on account of cancellation of bookings constitute taxable consideration for service tax.Issue (i): Whether cenvat credit on club/membership fees, outdoor catering and rent-a-cab services is ineligible under the exclusion clause in Rule 2(l) of the Cenvat Credit Rules, 2004.Analysis: The Tribunal examined the invoices and factual finding that these services were used for business meetings, business promotion and for business delegates rather than for personal consumption. The Court applied the post-1 April 2011 position that the exclusion operates only where input services are shown to be used for personal consumption; the burden to prove personal use rests on the Revenue. The Tribunal relied on precedents holding that denial of credit requires admissible evidence showing personal consumption and not mere invocation of the exclusion clause.Conclusion: Cenvat credit on club/membership fees, outdoor catering and rent-a-cab services is not ineligible; denial of credit is set aside in favour of the assessee.Issue (ii): Whether amounts forfeited/received as cancellation charges are taxable as consideration for services rendered.Analysis: The Tribunal considered authorities and Circular No.214/1/2022-ST and concluded that receipts on account of cancellation of bookings are compensatory in nature (liquidated damages/penalty) and do not constitute consideration for any service rendered by the appellant. The Tribunal followed its earlier decision in Tata Housing Dev. Co. Ltd. and related circular guidance in arriving at this classification.Conclusion: Amounts received as cancellation forfeiture/compensation are not taxable as service consideration; demand on this count is set aside in favour of the assessee.Final Conclusion: The impugned order confirming demand and imposing penalties is set aside and the appeal is allowed; the findings denying cenvat credit and taxing cancellation forfeiture are reversed.Ratio Decidendi: The exclusion from cenvat credit enacted from April 2011 disallows only services that are demonstrably for personal consumption; absent admissible evidence proving personal use, credit cannot be denied, and amounts received as cancellation forfeiture that are compensatory in nature do not constitute taxable consideration for services.
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