Catering Service – Credit of service tax would be allowed except where the cost of food has been recovered from the employee/worker

In the case of Commissioner of Central Excise, Nagpur Vs Ultra Cement Ltd.  , the Nagpur Bench of Hon’ble Bombay High Court has held that credit of service tax would be allowed except where the cost of food has been recovered from the employee/worker. Although, ld. counsel submits that a token amount of Re.1/- has been collected from the employees/workers of the assessee’s company, since show cause notice does not advert to this factual position nor do the orders of the authorities below consider this aspect, the impugned order is set aside and the case remitted to the adjudicating authority for fresh decision in the light of the Hon’ble High Court judgment cited supra.

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI

Appeal No. E/S/395/10 & E/747/2010

Arising out of Order-in-Appeal No.14/2010 [M-IV (D)] Dated: 18.8.2010
Passed by the Commissioner of Central Excise (Appeals), Chennai

Date of Decision: 11.3.2011

CRP (INDIA) PRIVATE LTD

Vs

COMMISSIONER OF CENTRAL EXCISE, CHENNAI

STAY ORDER NO.358/2011
FINAL ORDER NO.460/2011

Per: Jyoti Balasundaram:

For reasons recorded below, I waived predeposit of service tax of Rs.2,36,550/- confirmed on the ground that assessees were not entitled to avail service tax credit on catering service, and proceed to decide the appeal itself at this stage with the consent of both sides.

2. I note that in the case of Commissioner of Central Excise, Nagpur Vs Ultra Cement Ltd.  , the Nagpur Bench of Hon’ble Bombay High Court has held that credit of service tax would be allowed except where the cost of food has been recovered from the employee/worker. Although, ld. counsel submits that a token amount of Re.1/- has been collected from the employees/workers of the assessee’s company, since show cause notice does not advert to this factual position nor do the orders of the authorities below consider this aspect, the impugned order is set aside and the case remitted to the adjudicating authority for fresh decision in the light of the Hon’ble High Court judgment cited supra.

3. The appeal is thus allowed by way of remand.

(Dictated and pronounced in open court)

NF