TaxTMI 
TaxTMI 
2011 (3) TMI 1373
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....g activity is eligible for input service tax credit. The term 'activities relating to business' has been amplified with the word "such as" auditing, accounting, financing, recruitment, and quality control, coaching and training, computer networking, credit rating share registry and security etc., It is not exhaustive and therefore expenses such as providing Shamiyana services, furniture at the time of celebration of Kannada Rajyostava, spending money for colour photography and expenses incurred for inaugural function of Kengeri Police Station would come within meaning of the activities of business and therefore they were eligible to avail input tax credit for these two items and there was no intention to evade duty as it has already been held in terms of the several Judgments of the Apex Court that such expenses do come within the meaning of business expenses. Therefore they sent a reply to the show cause notice justifying the action. However, the assessing authority did not accept the said contention. He issued the demand for a sum of Rs. 54,216/- towards the bill of Shamiyana and photography services and claimed an equal amount of penalty and interest. Aggrieved by the said order....
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.... the police also celebrate this function. The assessee bears the entire expenses in regard to Shamiyana, photography services and other incidental expenses. He pays the service tax for the services so rendered. All these activities carried-on are activities relating to business. In fact one such advantage which the assessee derives by such a function is that the security of the entire establishment is protected. It also involves safety of the workmen. Therefore it is incorrect to say that these expenses do not fall within the definition of activities relating to business. The authorities have taken a very narrow meaning of the definition of input service and the inclusive definition includes these expenses. 6. Per contra, the learned counsel appearing for the revenue submitted that as rightly pointed out by the Tribunal, social functions to entertain the employees, Rajyostava function and inauguration of police station cannot be brought within the ambit of activities relating to business and therefore the order passed by the Tribunal is legal and valid and does not call for interference on this ground. However he assails the remaining portion of the order where the Tribunal....
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.... various dimensions. Preventing any unruly incident is also one such aspect. The State Government has declared November, 1st as Karnataka Rajyosthava day. It is on that day the present Karnataka State came into existence after re-organization of States on linguistic basis. The said day is declared as a holiday. The people of Karnataka are duty bound to celebrate Karnataka Rajyostava day as a fundamental duty, to protect and preserve the culture of Kannadigas. It is not uncommon that when such local functions are not conducted, there will be trouble not only inside the factory premises but also outside. Various organisations have come up in the state which whip up the feelings of the people and attack institutions which will not fall in line. Some times, Government is helpless in these matters. They act only after the damage. It results in serious law and order problem and security concerns. The best way to protect the establishment is to extend financial help to the employees in celebrating such functions and also rope in police authorities. It serves the interests of the industry. The money spent on such functions is negligible. All that is done in these functions is to put up a s....
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.... as well as the business of manufacture of final product would qualify to be input service under Rule 2(l) of 2004 Rules." 11. There cannot be any quarrel regarding the said proposition of law. As stated therein, the definition of input service is more exhaustive than input. Whether it is input or input service there should be nexus or an integral connection with the manufacture of final products as well as the business activity. At the same time, because of the exhaustive definition of input service, the scope of nexus or integral connection is also explained and infact is specifically provided. Therefore to find out whether there is a nexus or integral connection with the manufacturer of final products. We have to keep in mind the exhaustive definition contained in input service and then the word used therein, that is, the activities relating to business and then decide whether any particular service would constitute input service. The real test is, whether there is a nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product. In the case of the business of manufacture of final products, providing catering s....