By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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CENVAT Credit on input services of outdoor catering and mandap keeper used for organising a function to felicitate students prior to 01-04-2011 is allowable.
Facts: The appellant provided commercial training and coaching services and as a part thereof, they organised a function to felicitate students for which the appellant did not recover any charges from the students and availed CENVAT Credit on input services of outdoor catering and mandap keeper services. The Department alleged that such services are not input services as per section 2(l) of the CCR.
Held: The Tribunal noted that neither any evidence of recovery of any expenses against the appellant was available nor any allegation by revenue was made for this. It also took a view that decision of the Karnataka High Court in the case of [2012] 20 taxmann.com 699 Toyota Kirloskar Motors (P.) Ltd. vs. CCE is squarely applicable to this case and accordingly allowed the credit.
Note: In Toyota Kirloskar case, while interpreting Rule 2(l) the Court followed the test as to whether there is a nexus with the manufacture of final products as well as the business of manufacture of final product. It was further held that, to find out whether there is a nexus with the manufacturer of final products, it is necessary to keep in mind the exhaustive definition contained in input service and then the word used therein, i.e., the activities relating to business and then decide whether any particular service would constitute input service. The Court took a view that such expenses are incurred in connection with activities relating to business and hence allowable as CENVAT Credit. Therefore, this decision may not apply in respect of period after 01-04-2011 when scope of inclusive part of the definition was restricted by deleting the expression “activities relating to business such as”.
