TaxTMI 
TaxTMI 
2022 (9) TMI 128
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....ainst the cenvat credit disallowed. 21.2 I order the recovery of interest at appropriate rate from M/s. IDBI Intech Ltd. under the provisions of Rule 14(ii) of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 and appropriate the Rs.18,62,142/- paid by them vide GAR-7 Challan No 50105 dated 03/07/2018. 21.3 I impose penalty of Rs. 32,51,210/-(Rupees Thirty Two Lakhs Fifty One Thousand Two Hundred Ten Only) on M/s. IDBI Intech Ltd. under the provisions of Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994." 2.1 The appellant is provider of services under the category of 'information & technology software service', 'commercial training service' and 'business auxiliary service'. They were also operating under cenvat credit scheme and availing cenvat credit of services paid on input services and capital goods received by them for providing output services. During the course of audit, it was detected that the appellant has availed inadmissible cenvat credit of Rs.32,51,210/- of service tax paid on outdoor catering services during the period 2012-13, from 01.07.2012 to 2017-18 upto June 2018. This is exclud....
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.... appellant provides 24*7 IT support services to its clients. • As per Maharashtra Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2017 any establishment employing more than 100 employees is required to provide canteen facilities to their employees. Thus, the appellant was under a statutory obligation to provide catering services to its employees. • According to Rule 2(l) of the Cenvat Credit Rules, 2004 input service means 'any service used by a provider of output service for providing an output service but excludes services in relation to outdoor catering when such services are used primarily for personal use or consumption of any employee.' • Appellant was statutorily obliged to provide canteen services to enable it to carry out its business in due course. The canteen facilities are used in relation to business activities of company. • The Tribunal in the case of Hawkins Cookers [2021 (3) TMI 789] has held that the appellant is entitled to avail such credit provided the amount is paid by it and not collected from the individual employees to meet the expenses. • In the case of Ganesan....
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....rvice' means any service: (i) used by a provider of output service for providing an output service: or (ii) Used by a manufacturer.....but excludes; (A)............... (B)............... (BA)............ or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness center, life insurance, health insurance and travel benefits extended to employee on vacation such as leave or Home Travel Concession, when such services are used primarily for personal use or consumption by any employee" On perusal of input service definition, it is clear that outdoor catering service, when such services are primarily used for personal use or consumption of an employee, then such service is excluded from the definition of input service. I find that issue of admissibility of cenvat credit on outdoor catering service with effect from 01.04.2011 has been examined by the Larger Bench of the Tribunal in the case of Wipro Ltd. Vs. CCE, Bangalore-III reported in 2018 (363) ELT 1111 (T-LB) and held that clause( c) of Rule 2) is specifically exc....
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....een many legal issues on the availability of credit on a number of inputs or input services which are being rationalized by laying down clear definition so that the scope of inputs and input services that are eligible and those that are not is clear. Further, we also find from the clarification issued by the Join Secretary (TRU) explaining the intention of the Legislature for the changes brought by way of amendment in the definition of input service. Further, we also note that primarily the service should be first covered under the definition of input service and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for Cenvat credit. We also find that the food is always mainly for personal consumption only. The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded. whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. Therefore keeping in view above discussions....
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....ed above. As per the exclusion clause, it is very clear that services in relation to outdoor category have been excluded from the definition of input service. These services have been used for the personal use or consumption of the employee of the appellant. Cenvat credit scheme is a beneficial piece of legislation which allows for tariff in respect of the taxes paid on the input service and capital goods used by the manufacturer/service provider to be utilised for payment of central excise duty or service tax in respect of the goods manufactured and cleared for that output services provided. The boundary wall of the scheme has been drawn by way of defining various services such as input services. The definition of input services specifically excludes the outdoor catering services from the purview of the scheme. The argument that this service has been provided as per the Maharashtra Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2017 cannot be sustained in view of the specific exclusion provided by the definition incorporated in the scheme. 4.4 This issue came for consideration of Hon'ble High Court of Karnataka in the case of Toyota Kirolsaka M....
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....ule 2(l) defining the 'input service' came into effect w.e.f., 1-4-2011. The definition of 'input service' post-amendment contains exclusion clause and exclusion clause was effected w.e.f. 1-4- 2011. Clause (c) of the said exclusion clause specifically excludes the services provided in relation to 'outdoor catering' services. It is certainly not in dispute that said services prior to 1-4-2011 have been held to be covered by the definition of 'input service', however, after the amendment came into force in the light of specific exclusion clause, 'outdoor catering' service is not at all covered under the definition of 'input service'. 16. Heavy reliance has been placed upon a judgment delivered by the Madras High Court in the case of Ganeshan Builders Ltd., (supra). In the aforesaid case, there was an insurance in existence and it was not an insurance in individual worker's name. The Madras High Court has held that the insurance policy was assessee's specific and not employee's specific and as there was a mandatory duty casted upon the assessee to establish a canteen under the Building and Other Workers (Regulation of Employment and Conditions of Service) Act, 1996, has allo....
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....axing Statute one has to look merely at what is clearly said. Justice G.P. Singh in his land mark work on Principles of Statutory Interpretation, 14th Edition under the heading Strict Construction of Taxing Statute, has observed as under : "General Principles of strict construction A taxing statute is to be strictly construed. The well-established rule in the familiar words of LORD WENSLEYDALE, reaffirmed by LORD HALS-BURY and LORD SIMOND, means : "The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words" (Re, Micklethwait, (1885) 11 Ex 452, p.456. In a classic passage LORD CAIRNS stated the principle thus : "If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitab....
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....he SLP filed against the above said order of Hon'ble High Court of Karnataka, Hon'ble Supreme Court observed: "We have heard Mr. V. Sridharan, learned Senior Counsel appearing for the petitioner. The statutory provision Rule 2(1) defining "Input Service" post 01.04.2011 is very clear and the out-door catering services when such services are used primarily for personal use or consumption of any employee is held to be excluded from the definition of "Input Service". In that view of the matter, it cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service. We are in complete agreement with the view taken by the High Court. Hence, the Special Leave Petitions stand dismissed." 4.6 Hon'ble Bombay High Court has in case of Solar Industries India Ltd [2022 (60) GSTL 216 (Bom)] took the note of the above said decisions and observed as follows: "5. We have heard the Learned Counsel for the parties at length and we have perused the order passed by the Tribunal disallowing the claim for Cenvat credit. It was found by the Tribunal that by virtue of the amendment ....
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....at the Tribunal did not commit any error whatsoever in disallowing Cenvat credit to the appellant after 1-4-2011 in view of the amended provisions. The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as "input service"." 4.7 The issue was also considered by the Larger Bench of this Tribunal in the case of Wipro Ltd. [2018 (363) ELT 1111 (Tri.- LB)] and the bench specifically concluded as follows: "The Single Member vide its order dated 24-7-2017 [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] has observed that there are divergence of views on the issue of availability of service tax on "outdoor catering services" and consequently, he has referred the matter to the President for constituting a Larger Bench to settle the issue of law. The reference order [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] is reproduced herein below : "2. The issue involved in this case is regarding availability of Cenvat credit of the service tax paid on "outdoor catering service". The appellant herein are an industrial unit having a manufacturing/service provider unit wherein they engaged the services of outdoor catering service for provid....
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.... are otherwise covered by the definition. The Legislature in its wisdom has excluded certain services from the availment of Cenvat credit w.e.f. 1-4-2011, when such services are otherwise covered by the main definition clause of the 'input service'. To interpret, the said input clause, in such manner so as to hold that such services have direct or indirect nexus with the assessee's business and thus would be covered by the definition, would amount to defeat the legislative intent. 7.2 It is well settled that the legislative intent cannot be defeated by adopting interpretation which is clearly against such intent. Further, we find that from the Budget Speech of the Finance Minister dated 28-2-2011 wherein the Hon7ble Minister has categorically stated that due to complexities there has been many legal issues on the availability of credit on a number of inputs or input services which are being rationalized by laying down clear definition so that the scope of inputs and input services that are eligible and those that are not, is clear. Further, we also find from the clarification issued by the Joint Secretary (TRU) explaining the intention of the Legislature for the changes br....
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....d/ or retrieval service through computer network 0044 0153 00440154 00441333 Commercial training or coaching 0044 0229 00440230 00441374 Maintenance or repair service 0044 0245 00440246 00441388 Business auxiliary service 0044 0225 00440226 00441371 4.7 Even the adjudicating authority has in the order recorded the following:- Year TOTAL CENVAT CREDIT AVAILED REVERSAL MADE BY THE ASSESSEE TO THE EXTENT OF CONTRIBUTION MADE BY THEIR EMPLOYEES ON THEIR OWN REVERSAL MADE BY THE ASSESSEE TO THE EXTENT OF CONTRIBUTION MADE BY THEIR EMPLOYEES AFTER AUDIT OBJECTION (OBJECTION ACCEPTED AND LETTER FOR WAIVER OF SCN IS GIVEN) BALANCE CENVAT CREIT DEMANDED UNDER PRESENT SCN (OBJECTION NOT ACCEPTED) 2012-13 7,11,425 -- 2,59,246 4,52,179 2013-14 8,81,272 -- 2,69,150 6,12,122 2014-15 7,68,572 31841 2,31,132 5,37,440 2015-16 8,6,160 2 96,442 -- 5,64,718 2016-17 10,74,025 3,62,292 -- 7,11,733 2017-18 (till 30/06/2017 5,14,511 1,09,652 -- 4,04,859 TOTAL 48,10,965 8,00,227 7,59,528 32,51,210 4.8 It was ....