Cenvat Credit eligibility for catering, photography and mandap keeper services.

PJ/CASE LAW/2015-16/2941

Case:- BANSAL CLASSES VERSUS COMMISSIONER OF C. EX. & S.T., JAIPUR-I

Citation:- 2015 (39) S.T.R. 967 (Raj.)

Brief facts:- This appeal has been filed against the final Order-in-Appeal dated 13-9-2013 passed by Customs, Excise & Service Tax Appellate Tribunal. The assessee is holding service tax registration providing commercial training and coaching services to the students and is not entitled to confer any degree on them.
Assessee has availed the Cenvat credit in respect to Service tax paid on various input services. Scrutiny of the records of appellant revealed that it had wrongly availed Cenvat credit amounting to Rs. 1,04,035/- during 1-8-2005 to 30-9-2008 on certain ineligible input services catering, photography, tent (Mandap keeper), maintenance & repairs (motor vehicles), rent for hiring examination hall and travelling expenses.

Appellant’s contention:-The Appellant contended that he is essentially providing commercial training and coaching services to the students. It is not permitted to confer educational degrees on the students. The services of catering, photography and tents are used by the appellant to encourage the successful students in coaching.
Appellant states that the action taken by the respondent was beyond the period of limitation.

Respondent’s contention:- The respondent contended that -
(i)         Its service was covered under the commercial training and coaching services to the students and is not entitled to confer any degree on them.
(ii)        The Revenue was of the view that Cenvat credit was not admissible to the appellant as it did not cover under the definition of input services as provided in Rule 2(1) of Cenvat Credit Rules because these services are not used in or in relation to providing output services. The Department, therefore, issued show cause notice to the appellant and demanded Service tax along with interest with proposed penalty.
(iii)       Show cause notice was decided against the appellant and the order-in-original was challenged before the Commissioner (Appeals) who vide order dated 21-9-2012 dismissed the same after modifying the penalty amount. Undeterred, the appellant filed appeal before the Appellate Tribunal which has been partly allowed by the impugned order.
(iv)       The department contended that the above services are used only after commercial training or coaching is over. The celebrations are organized by the appellant during the academic sessions to encourage the existing students and motivate new students. In these celebrations, catering, photography and tents are used by the appellant and these celebrations are held only when students pass commercial training or coaching classes. The appellant is paying Service tax under the output service of commercial training or coaching. Once the students pass their coaching classes, the activities of catering, photography and tent services cannot be said to have been used to provide output service.

Reasoning of judgment:-The judgment was quite reasonable on the ground that Cenvat credit of Mandap, photography, catering cannot be availed since these input services have been used for encouraging the existing students and motivating new students. Since once the students passed the coaching classes, the activities of catering, photography and tent services cannot be said to have been used to provide output service. Similarly, the appellant maintain and repair its motor vehicle during the course of the business and there is no material to show that repair & maintenance have any connection with commercial training or coaching. The travelling expenses incurred by the appellant for the business tours cannot be related to provision for commercial training or coaching and according the tribunal is correct in denying the said expenses to avail Cenvat credit.
The appellant counsel contention that the action taken by the respondent was beyond the period of limitation was not argued before the appellant tribunal.
In view of the above findings, the appeal was found devoid of any merits and was dismissed.

Decision:-Appeal dismissed.

Comment:- The essence of the case is that since the input services of catering, photography, mandap keeper services have been availed by the coaching centre for encouraging the meritorious students, it cannot be said that the said input services are used for providing the output service of commercial, coaching or training. Therefore, the cenvat credit for the said input services was denied. Moreover, as the contention of limitation was not argued before the tribunal, the same was not considered by the High Court.

Prepared by:- Manish Satyani

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PJ/CASE LAW/2015-16/2941

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