TaxTMI 
TaxTMI 
2019 (9) TMI 888
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....accounts of the appellant department noticed that they had availed and utilised Cenvat credit amounting to Rs. 23,88,526/- on input services such as internet services, mobile phone services, tatasky D2H services, employee insurance services and employee mediclaim policies which were exclusively provided for their employees at their residential quarters. As the services are primarily procured for personal consumption of employees, they are excluded from the definition of input service as per clause (C) of Rule 2(l) of Cenvat Credit Rules (CCR), 2004. It was felt that Cenvat credit had been wrongly availed and therefore, the same is liable for recovery under Rule 14 of CCR, 2004 read with section 73 of the Finance Act, 1994. A demand has been....
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....le 2(l) of CCR, 2004 from the definition of input service. 2) That they have availed Cenvat credit on the basis of debit notes which are not eligible documents for availing Cenvat credit under Rule 9 of CCR, 2004. 4. As far as the first allegation is concerned, he would submit that it is true that they have taken Cenvat credit on the alleged services which have been provided by them to their employees in their residential quarters. However, they have also recovered amounts for these services from their employees along with appropriate service tax and paid such service tax to the Government account. They have further reflected these amounts in their ST-3 returns filed with the department. In this factual matrix, the employees, as far as t....
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....ified in the Negative List or otherwise exempted. 9. One of the ingredients for the taxation is that such activity should be provided for consideration. Where the employees pay for such services or where the amount is deducted from the salary, there does not seem to be any doubt.However, in certain situations, such services may be provided against a portion of the salary foregone by the employee. Such activities will also be considered as having been made for a consideration and thus liable to tax. Cenvat credit for inputs and input services used to provide such services will be eligible under extant rules. The said goods or services would now not be construed to be for personal use or consumption of an employee per se and rather shall ....
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....and paid service tax on such amounts does not change the fact that the services were provided for the personal use of their employees. Therefore, there is no force in the argument of the appellant. As far as the draft circular is concerned, he would submit that it was only a draft circular which has never been issued and therefore, it is not binding on the department. He further relies on the judgment of the larger bench of the Tribunal in the case of Wipro Ltd [2018 (363) ELT 1111 (Tri-LB)] to assert that services meant mainly for personal consumption of employees cannot be taken as input services. 9. I have considered the arguments on both sides and perused the records. What is relevant in this case is the nature of the services on which....
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....mption from payment of service tax if he has rendered services, even if such services are rendered to their own employees for a consideration. This issue has been examined and clarified in the draft circular which never came to be issued. Nevertheless, the fact remains that there are two kinds of relationships between appellant and their employees. First, they have a relationship as an employer and employee. As far as this relationship is concerned, any input service which is availed to provide benefits to their employees is excluded from Rule 2(l). Secondly, they have a relationship as a service provider and a service recipient. As far as these services rendered with respect to this equation are concerned, the appellant is bound to pay ser....