TaxTMI 
TaxTMI 
2023 (3) TMI 1435
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....pugned order Commissioner (Appeals) has upheld the order of original authority denying the CENVAT credit on the Outdoor Catering services, for the period prior to 01.04.2011. 2.1 The appellant is inter alia, engaged in manufacturing of bars and rods of steel and finished rings & gears. The head office of the Appellant is located at Raigad. 2.2 During the dispute period appellant has entered into an agreement with an outdoor caterer for supplying food, beverages etc at the canteen facility to the employees and workers of the appellant within the factory premises. The service providers raised invoices on the appellant for the service charges along with service tax thereon. The appellant, on the strength of the invoices of service provider, availed cenvat credit of service tax paid on input service. 2.3 Revenue was of the view that disputed service did not qualify as "input service" within the meaning of Rule 2(1) of the Cenvat Credit 2004, as the same was not used in or in relation to manufacture of finished goods. Therefore, cenvat credit of service amounting to Rs. 39,57,179/- was denied. 2.4 Two show cause notices dated 21.03.2011 and 18.01.2012 were issued to the appe....
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....the benefit of cenvat credit on input stage goods and services must be ordinarily allowed as long as a connection between the input stage goods and services is established. Conceptually as well as a matter of policy, any input service that forms a part of the value of the final product should be eligible for the benefit of Cenvat Credit. xx xx xx 38. Service tax therefore, paid on expenditure incurred by the assessee on advertisements sales promotion, market research will have to be allowed as input stage credit more particularly if the same forms a part of the price of final product of the assessee on which excise duty is paid. In other words, credit of input service must be allowed on expenditure incurred by the assessee which form a part of the assessable value of the final product. If the above is not done, as sought to be done by the department in the present case, it will defeat the very basis and genesis Cenvat i.e. value added tax. 39. The definition of input service which has been reproduced earlier, can be effectively divided into the following five categories, in so far as a manufacturer is concerned : (i) Any service used by the manuf....
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....missioner of C. Ex., Nagpur v. Ultratech Cement Ltd. [2010 (20) S.T.R. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom.)], after considering the earlier judgment of the Bombay High Court in Coca Cola India, took the view that the definition of 'input service' in Rule 2(l) of the 2004 Rules consists of three categories of services, and Cenvat credit of service tax paid on all such services would be available to an assessee. The relevant portion of the judgment of the Bombay High Court is reproduced below : "27. The definition of "input service" as per rule 2(l) of 2004 Rules (insofar as it relates to the manufacture of final product is concerned), consists of three categories of services. The first category, covers services which are directly or indirectly used in or in relation to the manufacture of final products. The second category, covers the services which are used for clearance of the final products up to the place of removal. The third category, includes services namely : (a) Services used in relation to setting up, modernization,renovation or repairs of a factory, (b) Services used in an office relating to such factory, (c) Services like advertis....
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...., - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and (clearance of final products upto the place of removal,)" "and includes" services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" 10. As is clear from the definition any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products constitutes input service. Various services are set out in the definition expressly, as constituting input service. It also includes tran....
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.... * Leave with pay and holiday payment * Leave encashment * Other allowances such as children's education allowance, conveyance allowance which are payable to employees in the normal course of business etc." Canteen Service : 12. It is in this context that when the assessee provides outdoor canteen facilities because of a statutory obligation imposed on him under Section 46 of the Factories Act, it becomes a condition of service as far as the employees are concerned. He has paid the service tax on outdoor canteen services. The said expenses incurred by the assessee will also be taken into consideration before fixing the price of the final product. It may be a welfare measure but certainly it is not a charity provided by the employer to the employees. It is an onerous legal obligation imposed on him. The cost incurred in rendering such service will be included in the cost of production. Rent-A-Cab Service/Transportation : ..... Insurance/Health Policy : .... 15. Therefore, merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not con....
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....to 31/03/2011 37 Date: 31st March 2011 Particulars Total Rate Amount (Rs.) Quantity Tea Coupons 115544 2.00 231088.00 Snacks Coupons 130755 7.00 915285.00 Lunch & Dinner Coupons 33652 21.00 706692.00 Guest Coupons a) Tea 8819 2.00 17638.00 b) Snacks 6067 7.00 42469.00 d) Lunch Overtime Lunch 287 21.00 6027.00 1937 21.00 40677.00 TOTAL 19,59,876.00 Service Tax @10% 97,993.80 Mahindra Ugine Steet Co. Lid. Khopol Service Tax Input Credit SL. No.0.868/2011-12 Rupees 30.06.2017 twenty three lac four thousand two hundred eighty eight and ps. Ten only VAT TIN NO. 27295206700V Regd. ST No. AGVPS7302QSD001 We hereby certify that istration certificate my/our under the shtra Value Added Tax Act. 2002 res on the date on which the sale the rods specified in this Tax Invoice by melus and that the erection of the sale covered by the E.Cess @2% Higher E.Cess 1% VAT @ 12.5% TOTAL Less Recoveries: GRAND TOTAL: 1959.87 979.83 2,44,984.50 23,05,794.10. 1,506.00 23,04,288.10o For SHRI....