TaxTMI 
TaxTMI 
2026 (7) TMI 1452
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....llant had taken service tax credit on ineligible input services such as architect service, cleaning service, club or association services, erection, commissioning or installation services, import services, insurance services, works contract services, event management service, supply of tangible goods service etc. It appeared that the impugned services do not fall under the definition of 'input services' for them and therefore it appeared that the assessee had wrongly taken credit on the same in contravention of the provisions of Rule 3 of the CENVAT Credit Rules, 2004 (CCR). Show Cause Notice were issued to the appellant for demanding the ineligible input services along with interest and penalty. Details of Show Cause Notices are as follows:- S. No. Show Cause Notice No. and Date Period Service Tax Demand 1. 17/2011 dated 21.1.2011 2009 - 10 Rs.7,84,50,016/- 2. 503/2011 dated 18.10.2011 2010 - 11 Rs.13,82,138/- 3. 220/2013 dated 21.6.2013 2011 - 12 Rs.19,58,272/- 4. 21/2014 dated 27.10.2014 2012 - 13 Rs.23,88,707/- 5. 57/2015 dated 20.4.2015 2013 - 14 Rs.1,65,25,316/- 6. 19/2016 dated 1.4.2016 2014 - S....
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.... (C) During the disputed period April 2009 to September 2015, the definition of "input service" was of wide amplitude and covered services used for providing output services, including services connected with business activities. Judicial precedents, including CCE, Coimbatore v. Jawahar Mills [2001 (132) ELT 3 (SC)], have consistently held that the expression "input service" must be construed broadly and that even services having a nexus with output services qualify for credit. (D) The amendment to the definition of "input service" with effect from 01.04.2011, by Notification No. 3/2011-C.E. (N.T.) dated 01.03.2011, did not generally narrow the scope of eligible business-related services. It merely deleted certain expressions, specifically included business exhibition and legal services, and introduced an exclusion clause for identified services such as outdoor catering, renta-cab, life insurance and health insurance. The very need for such specific exclusions shows that, but for the exclusion clause, such services would otherwise fall within the ambit of input services. (E) The Appellant has also filed a detailed statement, annexed as Exhibit "A", establ....
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....nd clearance of final products upon 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." From 01.04.2011 upto 30.06.2012 "2(l) "input service" means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by a 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 modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or pr....
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....rs 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes:- (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof, or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or"; (B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods, or "(BA) servic....
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.... legal services, transportation up to the place of removal etc. The most significant feature of the amended was an express exclusion clause which, explicitly denied credit for : (a) Certain specified construction-related services. (b) Certain motor vehicle-related services and (c) Services for employees' personal use or consumption (e.g., catering, health insurance, and vacation travel). The Hon'ble Supreme Court in Toyota Kirloskar Motor Pvt. Ltd. Vs Commissioner of Central Tax [2021 (55) G.S.T.L. 129 (S.C.)], upheld the denial of CENVAT credit on outdoor catering, ruling that post-2011 statutory exclusions are clear and cannot be interpreted broadly. Further in Solar Industries India Ltd. Vs Commissioner of C. Ex, Cus & S.T., Nagpur -II [2022 (60) G.S.T.L. 216 (Bom.)], the Hon'ble Bombay High Court, held that employee transportation/ rent-a-cab services for commuting constitute a personal convenience and are ineligible for credit post01.04.2011. The judgment was affirmed by the Hon'ble Supreme Court [2022 (64) G.S.T.L. 257 (S.C.)]. Hence even if an employer incurs the cost, services like outdoor catering, health/life insurance, clubs, and travel ....
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....he impugned input service. Mere commercial expediency, business necessity, or the fact that the expenditure forms part of the cost of business is insufficient. It is for the Appellant to discharge the onus of demonstrating that the services being used as input services in relation to their output service. Further as stated by the Hon'ble Supreme court in Secunderabad Club Vs CIT [Civil Appeal Nos. 5195-5201 of 2012 Dated: August 17, 2023] "14. . . . According to the well-settled theory of precedents, every decision contains three basic ingredients: (i) findings of material facts, direct and inferential. An inferential finding of fact is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of (i) and (ii) above. For the purposes of the parties themselves and their privies, ingredient (iii) is the material element in the decision, for, it determines finally their rights and liabilities in relation to the subject-matter of the action. It is the judgment that estops the parties....
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....nts described as being related to contact points, management training and conferences are held in the impugned order to be largely administrative or employee-oriented in nature. The credit is hence admissible, in the light of the judgments cited by them. 11.6 Health and Fitness Service The service is availed as an employee welfare measure and no evidence has been produced to show that it is used for providing output service. For the period after 01.04.2011, services primarily used for personal consumption of employees stand excluded from the definition of input service. The credit is therefore inadmissible and recoverable. The judgment in DBOI Global - 2019 (20) GSTL 351 (Bom.), relates to the pre 01.04.2011 period. The judgment Reliance Industries - 2016 (45) STR 383 (Tri-Mumbai), does not state any principle involved. 11.7 Outdoor Catering Services The outdoor catering service is extended to employees and falls within services primarily meant for personal use or consumption of employees. The Hon'ble Supreme Court in Toyota Kirloskar Motor Pvt. Ltd. (supra), upheld the denial of CENVAT credit on outdoor catering, post 01.04.2011. Accordingly, the credit availed on outd....
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....me further reflect that the scope of eligible input services required administrative clarification. The dispute is, therefore, essentially interpretational. The numerous judicial decisions and Board circulars on the subject of input service credit establish that the issue involved a bona fide interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004. In the absence of positive evidence of suppression, fraud, wilful misstatement or intent to evade duty, the extended period of limitation and penal provisions cannot be invoked. Further it is well settled that "suppression of facts" for invoking the extended period does not include every omission, non-disclosure, or erroneous understanding of law. As held by the Supreme Court in CCE Vs Chemphar Drugs and Liniments [(1989) 2 SCC 127]; Cosmic Dye Chemical Vs CCE [(1995) 6 SCC 117]; Pushpam Pharmaceuticals Company Vs Collector of Central Excise [1995 (78) ELT 401], and Uniworth Textiles Ltd. Vs Commissioner of Central Excise, Raipur [2013 (288) ELT 161 (SC)], suppression or misstatement must be wilful and deliberate, with intent to evade duty; mere omission or failure to disclose, without such intent, is insufficient. Revenue has hence....