Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1226

Security services to residential quarters maintained for workers- eligible as input service?
Case: Commissioner of Central Excise & Customs versus M/s Gujarat Heavy Chemicals Ltd.

Citation: 2011-TIOL-383-HC-AHM-ST

Issue: Whether the security service provided by the respondent at the residential quarters maintained for the workers would be included in the term 'input service' as defined in rule 2(l) of the Cenvat Credit Rules.

Brief Facts:Respondent-assessee is engaged in manufacture of soda ash. The Assessing Officer noticed that they had taken Cenvat Credit for providing security services in residential colony maintained by the Company for its workers. The Assessing Officer, therefore, considered the entitlement of the assessee to such Cenvat Credit along with other contentious issues.
After issuance of show cause notice and hearing, the Assessing Officer disallowed Cenvat Credit on service tax paid on security services in the residential colony.
In appeal, the Commissioner (Appeals) while redressing the grievance of the respondent-assessee on number of issues maintained the order of the Adjudicating authority with respect to service tax on security services.
In further appeal before the Tribunal, it was held by the Tribunal that the assessee is entitled to avail the credit of duty paid on the security services utilized for residential purposes and allow the appeal with consequential relief to the appellant.
Hence, Revenue is before the High Court.
In response to the notice issued by the High Court, assessee raised the preliminary objection with respect to maintainability of appeal on the ground of smallness of the claim.
Appellant’s Contention:Revenue pointed to Circular of CBEC dated 10th November, 2008 that irrespective of the quantum of claim, appeal can be raised for specified reasons. It was submitted that the circumstance in this case was of recurring nature.
On merits, it was submitted that the service tax paid on security service maintained by the assessee in the residential quarters cannot be covered under the definition 'input service' as defined in Rule 2(l) of the Cenvat Credit Rules. Revenue submitted that there is no nexus between the business activity of the assessee and service provided. Reliance was placed on the decision of the Bombay High Court in the case of CCE, Nagpur v. Manikgarh Cement, 2010 (20) STR 456 (Bom.).
Revenue pointed out that the Tribunal in the impugned judgment has placed reliance on a decision of Bombay Tribunal in the case of Manikgarh Cement v. Commissioner of C.Ex. & Customs, Nagpur reported in 2008(9) STR 554 (Tri.-Mumbai) which was reversed by the Bombay High Court in the case Manikgarh Cement (supra). Revenue also relied on the decision of the Apex Court in the case of Maruti Suzuki Ltd v. CCE, Delhi, 2009 (240) ELT 641 (SC).

Respondent’s Contention:Assessee conceded that the issue is one of recurring nature.
On merits, the Assessee contended that the definition of the term 'input service' contained in section 2(l) of the Cenvat Rules is sufficiently wide to include range of services used by the manufacturer for and or in relation to business. Reliance was placed on the case of CCE, Nagpur v. Ultra Tech Cement Ltd., 2010 (20) STR 577(Bom.) has examined the issue at length and held that outdoor catering services provided by the manufacturer is an 'input service' within the meaning of rule 2(l) of the Cenvat Credit Rules.
Assessee further relied on the decision of the Bombay High Court in the case of Coca Cola India Pvt. Ltd v. CCE Pune, III, 2009 (15) STR 657 (Bom.) wherein the Bombay High Court was pleased to allow benefit of Cenvat Credit on service tax to the manufacturer of concentrate on advertising service used for marketing of soft drink. Counsel also relied on a decision of the Apex court in the case of Ramala Sahkari Chini Mills Ltd. v. CCE, Meerut -I, 2010 (260) ELT 321 (SC)  by which, the decision of the Apex Court in the case of Maruti Suzuki Ltd (supra) has been referred to a Larger Bench.

Reasoning of the Judgment:The High Court held that definition of input service is expressed in the form of ‘means’ and ‘includes’. ‘Means’ part of the definition contains, inter alia, service used by he manufacture of final products and clearance of final products from the place of removal. The definition is exhaustive in nature. It is worded to include variety of services used not only for, but in relation to manufacture of final products and also for clearance of final products upto place of removal.
The High Court do not see any connection between the security service provided by the manufacturer in the residential quarters maintained for the workers as having any direct or indirect relation in the activity of manufacture of the final product. This is also the view of the Bombay High Court in the case of Manikgarh Cement (supra).
The High Court may notice that the Apex Court in the case of Maruti Suzuki Ltd was of the opinion that the electricity generated by the assessee and cleared to grid for distribution would not be part of manufacturing activity and be categorized as input used in manufacture of final product.
In the case of Ultra Tech Cement Ltd, on which respondent has placed heavy reliance, the Bombay High Court was considering outdoor catering service provided by the employer for its employees. It was a case wherein to provide for the canteen facilities to the workers was mandatory and failure to do so would entail penal consequences. It was on this background, the Bombay High Court held that outdoor catering services provided by the manufacturer to its workers would be covered within provisions of rule 2(l) of the Rules.
In the present case, the act of providing residential quarters by the manufacturer to its employees was voluntary. Providing further security service in such residential quarters was also an act voluntary in nature. Independently, the High Court finds that such activity cannot be termed within the sweep of expression of 'input service' as provided in rule 2(l) of the Rules.

Decision:Revenue’s Appeal is allowed.          

Comment:- This is very important decision in favour of revenue wherein it was held that the activity which is statutorily essential or which is used in manufacture of final product then the credit will be admissible. Every expenditure which is booked in books of accounts is not eligible for credit.
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com