Service Tax on Canteen Services and Staff Transportation.

[Santosh Mali]

Dear All,

We are manufacturer of Plastic Molded Parts of Motor Vehicle. Chapter heading 87089900. Our total employee including contractual are >250. Hence canteen facility to the workers is the statutory requirement under Section 46, of the Factories Act, 1956.

Hence we are availing the service tax for canteen services provided. Caterer is third party who is preparing foods at his location and serves in our premises. Also no deduction or charges applied to the employee by salary or other way.We relay on :

1.2013 (8) TMI 97 - CESTAT NEW DELHI2013 (8) TMI 97 - CESTAT NEW DELHI;

2.2016 (5) TMI 1077 - CESTAT BANGALORE

Cera Audit party objected the service tax availed against such canteen services. As per audit party Rule is amended and now Outdoor catering is now excluded in definition.

Please guide.....

Santosh S Mali.

9922402583.

[Ganeshan Kalyani]

Sir, the CESTAT New Delhi in the case of Hindustan Coca-Cola Beverages Pvt Ltd Versus CCE, Meerut-II, 2015 (10) TMI 2463 - CESTAT NEW DELHI  has allowed the credit of outdoor canteen service. And there are other case laws as well. However, the arrangement as mentioned in your query as regard the caterer who prepares the food at his premises and brings into you factory premises to serve your employee is something not understood because as per Factories Act, 1948, the canteen should be within the factory premises. Even though you may convince the auditor in terms of cited case laws. Thanks.

[Ganeshan Kalyani]

Sir, as regard staff transportation the case law cited by you holds good in my view. The nexus of such services need to be explained in the sense that without arranging for staff transportation particularly where the factory is setup in a Industrial area or remote area the staff would not be able to travel and even if they travel on their own it will disturb the journey which will have impact on their contribution in the work. The efficiency is best when transport is arranged which ultimately boost production. Thus the input service is in or in relation to manufacturing activity and therefore credit should be allowed. Thanks.

[KASTURI SETHI]

In support of the views of Sh.Ganeshan Kalyani, Sir, a case law is appended below:-

C.C.E., CHENNAI-III Versus VISTEON POWERTRAIN CONTROL SYSTEMS (P) LTD. 2016 (41) S.T.R. 168 (Mad.)  - 2015 (3) TMI 736 - MADRAS HIGH COURT

[KASTURI SETHI]

In support of the views of Sh.Ganeshan Kalyani, Sir another judgement is appended below :

"Tour operator" - for transportation of their employees to the residence andvice versa . High Court of Karnataka in the case of CCE v. Stanzen Toyotetsu India (P) Ltd. - 2011 (4) TMI 201 - KARNATAKA HIGH COURT has clearly held that these services are for transportation of employees and credit of tax paid is eligible as input service. Since the issue has already been settled, CENVAT credit of service tax paid on tour operator service is allowed.

[Ganeshan Kalyani]

Sri Kasturi Sir thanks for reproducing the Judgment. This is of utmost important based on which querist can draft a reply letter. Thanks.

[Suryanarayana Sathineni]

Sirs,

In my view, we need to consider the period of availing credit in terms of amended definition and the exclusion clauses, though the case law cited decided in favour of assessee since they relate to pre-amended definition period.

Best Regards

Surya

[KASTURI SETHI]

Sh.Santosh S. Mali Ji,

I agree with the views of Sh.Surya Narayana, Sir. Period of demand is very very crucial. At the same time I would like to say that It is a matter of common knowledge that any querist will not apply any case law in a casual fashion.Even any case law pertaining to past period also helps in making the concept clearer.Nobody can deny it. It is duty of a querist to read and understand all the aspects discussed in any judgement thoroughly before taking final decision.Even pro-revenue case laws are also very useful in resolving the problem in favour of assessee. These cannot be brushed aside.

Moreover, this forum is a First Aid. If any problem of a querist is solved completely, he is lucky. TMI Management is very benevolent in this aspect otherwise every querist is well aware about the hefty consultation fee being charged by other sites. TMI helps in saving money, time and energy of the querists as they get a single-window for the problems pertaining to Income Tax, VAT, Customs, Central Excise, Service Tax, Import-export (DGFT) etc.

[Santosh Mali]

Shri. Ganeshan Kalyani Sir, Shri. Kasturi Sethi Sir, Shri. Surya Narayana Sir, Thanks for your valuable reply. This will help me in future.

As suggested by Shri. Surya Narayana Sir that period to be consider.

In our Case we are availed credit from June 14 to 30th of April, 2016.

Thanks Once again.

Santosh S Mali.

9922402583.

AI Summary

Cenvat credit on canteen services and staff transport questioned after amendment; admissibility depends on nexus and period. Whether Cenvat credit is admissible on canteen services provided by an external caterer who prepares food offsite and serves employees, and on staff transportation, given cited pre amendment case law allowing such credits but audit objections based on an amendment excluding outdoor catering; admissibility turns on nexus to manufacturing activity and the specific period for which credit was claimed under the statutory definition in force.