Case Law Details
BMS Industries Ltd Vs Commissioner of CGST (CESTAT Mumbai)
Introduction: The CESTAT Mumbai recently issued a significant ruling in the case of BMS Industries Ltd Vs. Commissioner of CGST. The case revolved around the eligibility of cenvat credit for bus transportation charges incurred by the employer for employee commutes to the factory. The ruling sheds light on whether such charges constitute an input service under Rule 2(l) of the Cenvat Credit Rules, 2004, as amended. In this article, we will delve into the details of this ruling and its implications.
Detailed Analysis: Background and Dispute: The appellant, BMS Industries Ltd, is engaged in the manufacturing of excisable goods. During the period in question (April 2015 to December 2016), the company hired buses on a contract basis from a service provider to transport its employees from Kalyan station to their factory in Murbad and back after their shifts. The service provider invoiced the appellant, including service tax under reverse charge, which the appellant later claimed as cenvat credit, totaling Rs. 4,19,173/-. The department, however, contended that this credit was wrongly availed, leading to a show cause notice and an Order-in-Original confirming the inadmissible credit. On appeal, the Commissioner (Appeals) upheld the decision, which led to the appellant’s appeal to the CESTAT.
Key Arguments: The crux of the matter was whether, after an amendment in Rule 2(l) of the Cenvat Credit Rules, 2004, rented or contracted bus services were excluded from the definition of input service. The appellant argued that several decisions by different benches of the Tribunal supported the admissibility of cenvat credit for such services even after the amendment. They relied on these precedents to substantiate their claim.
Revenue’s Stand: The revenue authorities contended that the amended Rule 2(l) expressly excluded rented/contracted bus services from the definition of input service, making them ineligible for cenvat credit.
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