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Garden Maintenance, Event Management, Brokerage, Telephone and
Outdoor Catering services being essential for business are eligible
input services
Facts:
The Appellant was engaged
in the business of providing “port services” and has availed CENVAT
credit of service tax paid on garden maintenance, event management,
telephone charges and of brokerage paid for arranging the residential
accommodation for their employees for the period before April 2011. They
had also availed services of outdoor catering pre and post April 2011.
CENVAT credit was denied on the ground that there was no nexus between
the input services and the output services provided and that these
expenses were in the nature of a welfare activity.
Held:
For
the period before April 2011, it was argued that the definition of
input service comprising of two parts ‘means’ and ‘inclusive’ should be
read harmoniously as it enhances the scope of the definition. Further
the term “such as” signifies that any activity related to the
functioning of a business and not confined merely to the provision of
output service or manufacture of the final product should be considered
an input service. Accordingly, garden maintenance which is a requirement
cast by the Maharashtra State Pollution Central Board upon the Port,
event management services incurred at ceremonial occasions, brokerage
services, being essential for ensuring the availability of staff,
telephone and outdoor catering services being essential services to run
the business are allowable as input services. Further, for the period
post April 2011, it was argued that the Appellant was regulated by the
dock workers (safety, health & welfare) Act, 1990 and the employees
being more than 250, it was a statutory obligation to maintain adequate
canteen facilities. Thus, catering services being a part of the business
need and obligation to the employees who are essential hands of the
business had a direct bearing on the output services and were eligible
input services even post April 2011.
Note. Readers may
also note the decision in the case of Hindustan Coca Cola Beverages P.
Ltd vs. CCE, Nashik [2014]-TIOL-2460-CESTAT-MUM reported in the
BCAJFebruary 2015 issue wherein it has been observed that outdoor
catering services forming a part of cost of manufacture of final product
is allowable as CENVAT credit post 01/04/2011.
