Whether Service Tax paid on cab service for official of company for their timely completion of Job deniable for cenvat credit or not?

PJ/Case Laws/2011-12/1117

Prepared By:
CA. Rajani Thanvi &
Bharat Rathore

Case:Commr. of C.Ex., Vishakhapatnam Vs Andhra Pradesh Paper Mills Ltd.

Citation:2011(22) S.T.R. 126 (Tri. Bang.)

Issue:
The issues involved in this case were as follows:-

Whether Service Tax paid on cab service for official of company for their timely completion of Job deniable for cenvat credit or not?
Whether service tax paid on Landline phones installed in residences of Directors and officials deniable for cenvat credit or not?
Whether Service Tax paid on Professional Charges of Chartered Accountant are directly related to business deniable for cenvat credit or not?

Brief Facts: Respondenthad taken credit on various services namely:

Service Tax paid on Cab Service for officials of company.
Service Tax paid on Landline phones installed in residences of Director and officials,
Service Tax paid on professional charges of Chartered Accountant.

Respondent filed an appeal before commissioner (Appeals) against order of adjudicating authority and commissioner (Appeals) has given order in favour of Appellant. Appellant filed appeal against commissioner (Appeals) order, which has been decided against the appellant.

Respondent’s Contention:Respondent’scontention on each of the dispute are as follows:-

Cab Services:- The respondent submit that providing transport to officials is an important requirement for timely completion of job and it cannot be considered in the nature of GTA service for denial of credit.
Landline Telephone installed in residences of Director and officials:-The respondent submit that these bills were paid by the company. The respondent also relied upon the case of Keltech Energies Ltd. V/s Commissioner of C. Ex. Mangalore [2008(10)STR 280] as per this case credit of service tax paid on the landline phones installed in the Director’s and Company officials residences is rightly available to the appellants as Cenvat Credit, as the bills are paid by the company.

Professional Charges of Chartered Accountant:- The respondents submit that professional charges of chartered accountant are directly related to business activity and these charges incurred were paid by the company.

Appellant’s contention:-Appellant’scontention on each of the dispute are as follows:-

Cab Services:-The Appellant submit that cab service were utilised for the conveyance of company’s officers/ managers and other individuals of the organization. In other words it is a facility given by the company to their officers for their personal comfort. It is neither for inward transportation of goods/ inputs or capital goods nor used in or in relation to the manufacture of goods. And the respondent could not produce any evidence to indicate that these Cabs are used for the services mentioned in the definition of “Input Services”. Hence, the service tax should be recoverable form respondent.
Landline Telephone installed in residences of Director and officials:The Appellant submits that telephone service were utilised for the conveyance of company’s Director/officers. This facility given by the company to their Director/officers for their personal comfort. There is could be misuse of this facility.
Professional Charges of Chartered Accountant:- The Appellant submit that the service of professional charges of chartered accountant service is not relating to business activity and It is neither for in ward transportation of goods/ inputs or capital goods nor used in or in relation to the manufacture of goods.

Reasoning of Judgment: - The Hon’ble Tribunal relied on the cases of Stanzen Toyotetsu India Pvt. Ltd. Vs. CCE, Bangalore-III [2009 (14) S.T.R.316]. and Keltech Energies Ltd. V/s Commissioner of C. Ex. Mangalore [2008(10)STR 280] . The Tribunal find that the issue of eligibility of Cenvat Credit of service tax paid on telephone service as well as Rent –a –cab service has been settled in favour of the respondent and professional charges paid by the assessee to the Chartered Accountants, it can be directly related to business.

Judgment:Appeals filed by Revenue are rejected.

Comment:As the definition of input service covers the services relating to activities of business hence the cenvat credit of those services will be allowed even though these are not used in manufacturing of dutiable goods or providing of output service directly.

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PJ/Case Laws/2011-12/1117

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