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PJ/CASE LAW/2015-16/2569

Cenvat credit on outdoor catering services provided to employees

Case:-SRF LTD. VS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation:- 2014 (36) S.T.R. 830 (Tri.-Del.)

Brief Facts:- The dispute in the present two appeals relate to the availability of Cenvat credit of service tax paid on outdoor catering.

Appellant contentions:- Ld. Advocate submits that the legal issue stands decided by the Larger Bench decision of the Tribunal in the case of CCEv. GTC Industries Ltd. - 2008 (12) S.T.R. 468. However, in terms of the law declared by the Hon’ble Bombay High Court in the case of CCE, Nagpurv. Ultratech Cement Ltd. - 2010 (260) E.L.T. 369 (Bom.) = 2010 (20) S.T.R. 577 (Bom.), the credit would not be available to the extent of charging of the cost of outdoor catering from the employees. It was further submitted that the credit to the extent not available have already been reversed. However, he submits that during the relevant period the earlier decisions were in favour of the assessee and as such it is not the case of imposition of penalty. As regards interest, he submits that the credit in question was reversed without utilization in which case the decision of the Hon’ble Karnataka High Court in the case of CCEv. Bill Forge Pvt. Ltd. - 2012 (279) E.L.T. 209 (Kar.) = 2012 (26) S.T.R. 204 (Kar.) would apply.
 
Reasoning of Judgment:- As regards the availability of credit, where the employees are not charged, it was held that the issue is covered in favour of the assessee. The appellants are not contesting the credit involved in respect of the cases where the cost is being recovered from the employees. Accordingly, the impugned order is set aside and the authority below is directed to quantify the exact quantum of credit required to be reversed and also to verify the appellants’ claim of reversal of the same. As regards interest, if the credit stands reversed before utilization, the interest would not be leviable in terms of Karnataka High Court decision. The adjudication authority would also get the said fact verified and would pass fresh orders accordingly.
 
As regards penalty, Tribunal agreed with the ld. Advocate that it is not a case of any malafide intention so as to invoke the penal provision. Accordingly penalty imposed is set aside.
 
Appeals are disposed of in above terms.
 
Decision:- Appeal disposed off.

Comment:- The crux of the case is that the credit on outdoor catering services availed for employees would not be available to the extent charged from the employees. It is worth noting that the above cited decision is applicable for the prior period and now, there is specific prohibition for availing cenvat credit on the services availed for the personal benefit of employees.
 
Prepared By:Meet Jain
 
 

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