2009 (4) TMI 145

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....mmissioner (Appeals) sustaining a demand of duty of Rs. 4,05,259/- against one of the appellants for the period January, 2005 to April, 2008 and demand of duty of Rs. 87,062/- against the other appellant for the period February, 2005 to January, 2008 as also penalties equal to the respective amounts of duty. Each of the demands of duty arose out of denial of CENVAT credit of service tax paid on outdoor catering service received by the assessees in their factory-canteens and reckoned as 'input service' during the relevant period. Upholding the orders of the original authority, the learned Commissioner (Appeals) refused to recognize the said service as an 'input service' within the meaning of this term defined under Rule 2(1) of the CENVAT Cr....

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....output services. In respect of catering service, I am of the view that from the submissions made by the appellants these are in the nature of individual perquisites given to the Employees on which Fringe Benefit Tax is paid by the Company. Perquisites given to the individual must be distinguished from 'input services' availed by the Company. Therefore, I am of the view that Catering Services which provides free/subsidized food to the employees cannot be treated as input services in relation to the manufacture of the final product nor even the business of the Company." In the above para, the learned Commissioner (Appeals) refers to the decision of the Larger Bench as its "opinion." He has also noted that "some of the points raised by me i....

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....e" relating to the business. Nevertheless, the Commissioner (Appeals) chose to hold that the catering service which was used to provide free/subsidized food to the factory employees could not be treated as "input service" even in relation to the business of the company. Surprisingly, this view was taken on a set of facts strikingly similar to the facts of the case of G.T.C. industries. The appellate authority, obviously, chose not to follow the Tribunal's Larger Bench decision regardless of whether that decision had been taken in appeal by the Department. Even today, there is no claim by the DR that the Larger Bench decision is under challenge. 4. It appears from the records that each of the factories involved m this case had more than 2....