By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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CENVAT Credit—’rent a cab service’, ‘telephone service’ and ‘contract bus service’ – no distinction between services used at factory and corporate office and both are eligible CENVAT credit.
Facts:
The Appellant, a manufacturer, availed CENVAT of “Rent-a-cab Service”, “Telephone Services” and “Contract Bus Services” received at the corporate office against which the department demanded tax, interest and penalty.
The department contended that providing “rent-acab service” for officers at the corporate office was a welfare activity and not related to manufacturing. It further contended that the said services do not fall within the inclusive portion of the definition and argued that unless proved that the said services were essential for the manufacture, they cannot be considered as input services.
Held:
Allowing the appeal, the Hon. Tribunal held that:
• As many Courts and Tribunals have already held earlier, rent-a-cab service is covered under the definition of “input service” and that it also includes the transportation of executives and employees from residence to corporate office and back.
• All the three services (supra) are covered by the definition of input service and that no distinction can be made between the factory and corporate office as per the provisions of the CENVAT Credit Rules, 2004.
• Where the expenditure is incurred by the company in its books of accounts there is a presumption in favour of the appellant that the service is availed in relation to its business and thus no nexus is required to be proved so long as Revenue did not contend anything to the contrary.
(Note: In a similar case in 2013 (31) STR 441 (Tri-Bangalore) Emcon Technologies India Pvt. Ltd. vs. Commissioner of C. Ex., Bangalore also the Hon. Tribunal allowed the credit of rent-a-cab service. Further, in case of rent-a-cab service, the issue pertains to the period prior to 01-04-2011, i.e., prior to amendment of definition of “input service”).
