Case Law Details
Rohit Surfactant Pvt Ltd Vs CGST, C.C & C.E- UJJAIN (CESTAT Delhi)
It is seen that the Cenvat Credits have been disallowed by the lower authority, vide the impugned order, by observing that the services fall within the exclusion category specified in Rule 2 (I) (C). This exclusion clause disallows the Cenvat Credit in respect of certain specified services such as Membership of Club, Life Insurance etc when such services are used primarily for personal use or consumption of any employee. Upon perusal of some of the sample invoices furnished by the Ld. Consultant, it is seen that services such as membership of club is not for the personal benefit of any employee, but are for pursuing the business activities of the appellant. For example, such services include membership of Indian Home & Personal Care Industry Association, Foreign Exchange Information Service etc. With reference to Life Insurance Service, it is noted that the appellant is under a statutory obligation to provide group insurance scheme in their factory for the benefit of the employees. This cannot be said to be for the personal benefit of the employees. With reference to Air Travel Agent’s Service, the said services have been availed by the officials of the appellant in regard to their business.
FULL TEXT OF THE CESTAT JUDGMENT
1. The issue involved in these four appeals is identical and hence these appeals are decided through this common order. These appeals cover the disputed period from April, 2011 till June, 2015. The appellant has several manufacturing units situated at different parts of the county and are engaged in the manufacture of soap and detergent. Their Head-office has registration as ISD, for the purpose of distributing the credit on input services availed centrally, to various manufacturing units. The present dispute is in connection with the distribution of such service tax credit in respect of the following services:-
i. Club or Association Service.
ii. Life Insurance Service
iii. Air Travel Agent Service.
2. The lower authority has taken the view that after the amendment of the definition of input service given in Rule 2 (I) of the Cenvat Credit Rules, 2004, certain activities have been excluded and the services for which the credit have been denied, fall within the category of excluded services. Aggrieved by the decisions, the appeals stand filed before the Tribunal.
3. Heard Shri R.K. Ambwani, Ld. Consultant for the appellant and Shri Poddar, and P. Juneja, Ld. DR for the Revenue.
4. The arguments advanced by the Ld. Consultant are summarized below:-
i. The lower Authority has denied the Service Tax by contending that the services fall within the exclusion provided in 2(I) (C). But he argued that these services would be excludible only when such services are used primarily for personal use or consumption of any employee. By submitting copies of certain invoices covering the various services, he reiterated that services were not for personal use of any employee, but were used in relation to the activities of the company. He also referred to a copy of the Chartered Accountant’s Certificate dated 19/11/2014 issued by R. Mohla & Company CA, to this effect.
ii. He also submitted that the same issue for the earlier period stands decided by the Tribunal in their favour vide Final Order 50546-50547/2018 dated 05/02/2018.
5. Countering the arguments, the Ld. DR reiterated the orders passed by lower authority. He also submitted that the copies of the invoices, submitted by the Ld. CA may have to be verified by the field formations before extending the benefit.
6. After hearing both sides and perusal of record, it is seen that the Cenvat Credits have been disallowed by the lower authority, vide the impugned order, by observing that the services fall within the exclusion category specified in Rule 2 (I) (C). This exclusion clause disallows the Cenvat Credit in respect of certain specified services such as Membership of Club, Life Insurance etc when such services are used primarily for personal use or consumption of any employee. Upon perusal of some of the sample invoices furnished by the Ld. Consultant, it is seen that services such as membership of club is not for the personal benefit of any employee, but are for pursuing the business activities of the appellant. For example, such services include membership of Indian Home & Personal Care Industry Association, Foreign Exchange Information Service etc. With reference to Life Insurance Service, it is noted that the appellant is under a statutory obligation to provide group insurance scheme in their factory for the benefit of the employees. This cannot be said to be for the personal benefit of the employees. With reference to Air Travel Agent’s Service, the said services have been availed by the officials of the appellant in regard to their business.
7. It is also seen that identical issue has come up before the Tribunal and has been decided in favour of the appellant vide Final Order (Supra).
8. By following the same, the four impugned orders are set aside and all the appeals are allowed.
