Monday, March 23, 2015

Rent-a-cab and outdoor catering services used for business purposes are eligible for credit

Rent-a-cab services, outdoor catering services consumed for factory canteen and repair/maintenance of vehicles used for business purposes are eligible for credit as 'input services'; however, no credit is available to extent of amount recovered from employees.

a)Assessee took input service credit as follows:

a.'Rent-a-cab' services for bringing workers to their factory and vice versa.

b.Outdoor catering services availed by its workers on ground that it was statutory requirement to maintain factory canteen as there were more than 350 workers. Further, assessee submitted that pro rata credit attributable to amount recovered from workers for supply of concessional food was reversible.

c.Repair and maintenance services for vehicles owned by it.

b) Department denied credit on ground that these services had no nexus with manufacture.

Tribunal held partly in favour of assessee as under :

1) For 'rent-a-cab' and outdoor catering services: services in question had been availed by assessee in course of business of manufacturing; hence, assessee was entitled to take impugned credit. However, if any amount was recovered from employees towards these services, same was not entitled to credit. As this fact had not been examined, matter was remanded back for verification as to amount recovered from employees.

2) For repair and maintenance service: any service availed by a manufacturer in course of business is eligible for credit. Admittedly, vehicles in question had been used by assessee in course of their business being a manufacturer of excisable goods. Hence, assessee was entitled to credit – Caparo Fasteners v. Commissioner of Central Excise, Jaipur I - (2015) 55 165 (New Delhi - CESTAT).
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