Case Law Details
Toyota Kirloskar Motor Private Limited Vs Commissioner of Central Tax (Karnataka High Court)
No cenvat credit on outdoor catering service availed by assessee-employer for providing food and beverages in factory canteen
Conclusion: Services received by assessee in the capacity of employer for providing food and beverages in the canteen maintained and run in the factory as per the mandate of Section 46 of the Factories Act, 1948 would not be eligible for cenvat credit as the statutory definition of ‘input service’ under Rule 2(l) post amendment w.e.f., 1.4.2011 provided that ‘outdoor catering’ services fell under the exceptionary services in Rule 2(l)(c) of the Cenvat Credit Rules, 2004.
Held: Department issued a show cause notice wherein it was alleged that outdoor catering services were not eligible input services being excluded vide Rule 2(l)(c) of the Cenvat Credit Rules and accordingly, the show cause notice proposed to demand the credit with interest and imposition of penalty. A reply was filed to the show cause notice and the adjudicating authority had passed the order confirming the demand with interest and also imposed a penalty under Section 11AC r/w Rule 15(1) of the Cenvat Credit Rules, 2004. Appellant thereafter preferred an appeal before the Commissioner (Appeals) who had rejected the appeal. A second appeal was preferred before the CESTAT/Tribunal and the Tribunal had referred the matter as there were divergent decisions across India on the issue to a larger Bench and finally, the Tribunal had answered the reference in favour of the department and an order was passed dismissing the appeal. Assessee contended that AO, CIT (Appeals) and the Tribunal had erred in law and in facts in not appreciating the statutory definition of input service under the Cenvat Credit Rules, 2004 and as there was a duty casted upon assessee to establish a canteen under the Factories Act, 1948, by no stretch of imagination the amendment which included certain exceptionary services would disentitle assessee company from Cenvat Credit. The issue arose for consideration was whether the services received by assessee in the capacity of employer for providing food and beverages in the canteen maintained and run in the factory as per the mandate of Section 46 of the Factories Act, 1948 would be eligible for cenvat credit and it would be within scope of ‘Input Services’ as per Section 37(2)(xviaa) of the Central Excise Act, 1944 read with Section 94(2) of Finance Act, 1994. It was held that the statutory definition of ‘input service’ under Rule 2(l) post amendment w.e.f., 1.4.2011 provided that ‘outdoor catering’ services fell under the exceptionary services in Rule 2(l)(c) of the Cenvat Credit Rules, 2004. Hence, the Tribunal was justified in dismissing the appeal preferred by assessee. Resultantly, this Court had to look squarely at the words of the statute and interpret them. A Taxing Statute has to be interpreted in the light of what is clearly expressed, it cannot imply anything which is not expressed, it cannot merge provisions in the statute so as to supply any assumed deficiencies. Resultantly, this Court did not find any reason to interfere with the order passed by the Tribunal.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
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