Credit on outdoor catering services availed in the factory canteen allowed even when no. of employees less than 250.

PJ/Case Law/2014-15/2149

Case:- M/s PARAMOUNT COMMUNICATION LTD Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation:- 2014-TIOL-630-CESTAT-DEL

Brief facts:- The dispute in the appeal was related to the availability of credit of service tax paid on the outdoor catering service availed by the appellant in their factory canteen for the purpose of providing food to their employees. The impugned orders stood passed in de novo proceedings when the matter was earlier remanded by the Tribunal.

Reasoning of judgment:- From the impugned order of Commissioner (Appeals), it was seen that he had not followed the Larger Bench decision in the case of CCE Vs. GTC Industries Ltd.- 2008 (12) STR 468 (Tri.-LB) = 2008-TIOL-1634-CESTAT-MUM-LB by observing that the reasons for holding the outdoor catering services as input service in the said decision was that the assessee in that case, having more workers than 250, was under a statutory obligation to provide canteen services. He had further held that whereas in the present case number of employees was less than 250 the appellant was under no statutory legal obligation to provide canteen services.

Though it was a fact that number of workers was one of the criteria for the Larger Bench to hold the services as input services but to make a distinction on the basis of reasoning adopted by the Larger Bench could not be appreciated inasmuch as it was the ratio of the law declared by the Larger Bench which was applicable and not the reasoning. Apart from above, he also found that the Larger Bench held that the outdoor catering service was an input service irrespective of the fact that a subsidized food was provided or not or whether the cost of the food was given by the worker or by the factory. The issue was also decided by the Hon'ble Karnataka High Court in the case of CCE, Bangalore Vs. Stanzen Toyotetsu India (P) Ltd. 2011 (23) STR 444 (Kar.) = 2011-TIOL-866-HC-KA R-ST and by the Hon'ble Karnataka High Court decision in the case of CCE Vs. ACE Designers Ltd. 2012 (26) STR 193 (Kar.) = 2011-TIOL-931-HC-KAR-CX.

In fact in the same appellant’s case, Tribunal by following the above decisions held in favour of assessee and allowed their appeal reported as Paramount Communication Ltd. Vs. CCE 2013 (287) ELT 70 (Tri.-Del.). By following the same, he set aside the impugned order and allowed the appeal with consequential relief to the appellant. Stay petition as also appeal get disposed off in above manner.

Decision:-Appeal was allowed.

Comment:- The analogy drawn from the case is that when it has been ruled by the Larger Bench of the Tribunal that the credit of service tax paid on the outdoor catering services availed is admissible, it is available irrespective of the fact that the number of workers are less than 250 or not because it is the ratio of the case that is applicable and not the reasoning.

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PJ/Case Law/2014-15/2149

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