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PJ/Case Law /2016-17/3265

Whether CENVAT credit availed of service tax paid in respect of catering and renting of cycle stand services allowed?

Case:-  SUNDARAM FASTENERS LIMITED Versus COMMISSIONER C. EX., CHENNAI-IV

Citation:-2016 (43) S.T.R. 267 (Tri. - Chennai)

Brief Facts:-The service for catering was availed to maintain the canteen of the factory of the appellant. Maintenance of canteen being an obligation under the labour law, there should not be denial of CENVAT credit of service tax paid in respect of such canteen service availed. The second dispute is on the service tax paid in respect of renting of cycle stand. This is also relevant for the factory. Therefore, there cannot be denial of CENVAT credit of the service tax paid.

Appellant’s Contention:- The appellant, that service there was a factory and the catering service provided and rental of cycle stand. Appellant was saying there is connection with the output service provided service or the manufacturing carried out. Therefore, there should be avail of CENVAT credit of service tax paid in respect of such services.

Respondent Contention:- The Revenue agrees that there was a factory and the catering has been provided. So far as rental of the cycle stand is concerned, Revenue submits that has no connection either with the output service provided service nor the manufacturing carried out. Therefore, appellant should not be granted any relief.

Reasoning of Judgment:- The submissions made by both sides, it appears it appears that such service was availed to discharge an obligation under the Factories Act. Therefore, there shall not be denial of CENVAT credit in respect of service tax paid to avail the catering service for the factory. So far as rental of the cycle stand is concerned, that in no way establishes the distinction between output manufactured or service provided by the appellant. Therefore, appellant shall not get any relief on this count. There shall be allowance of the CENVAT credit on the catering service and neither interest nor penalty shall be levied. So far as service tax on rental of cycle stand is concerned, there shall be no allowance of CENVAT credit on that count but there shall be no penalty. Appellant is directed to make a working proportionately deducting the portion of the amount recovered and appropriate CENVAT credit shall be allowed.

Decision:-The appeal is accordingly partially allowed.

Comment:-The gist of the case is that the service was availed to discharge an obligation under the Factories Act. Therefore, there shall not be denial of CENVAT credit in respect of service tax paid to avail the catering service for the factory. As far as the cycle stand rental services are concerned no cenvat shall be allowed on this account on ground of no nexus been established.

Prepared by:- Bharat

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