Case Law Details
Case Name : Sudarshan Chemical Industries Ltd. Vs CCE Appeals (CESTAT Mumbai)
Appeal Number : E/920/12-Mum
Date of Judgement/Order : 14/01/2016
Related Assessment Year :
Inputs services also include services having some sort of indirect nexus with the assessee’s business activities
Brief of the case:
The CESTAT Mumbai in the case of Sudarshan Chemical Industries Ltd. vs. CCE (A) held that input services not only cover services of falling in the substantial part of Rule 2(l) of the Cenvat Credit Rules, 2004 but also cover services which are covered under the inclusive part as the same having some sort of nexus with the business activity of the assesses.
Facts of the case:
- The assesses is engaged in the manufacture of organic and inorganic pigments/chemicals, intermediates, pesticides etc. It is availing Cenvat credit of duty paid on inputs, capital goods and input services in accordance with the Cenvat Credit Rules, 2004.
- During the course of audit, the department observed that assesses was availing the credit of service tax paid on courier service, rent-a-cab service, tour and travel service and architecture consultancy service. Cenvat credit in respect of the same was disputed by the department.
- A show cause notice denying the credit was issued and thereafter the Deputy Commissioner of Central Excise vide his order-in-original confirmed the demand of Rs.1,71,317/-.
- Commissioner (Appeals) upheld the denial of credit along with interest and equal penalty. Aggrieved assesses is in appeal before the tribunal.
Contention of the Assesses:
- The learned counsel for the assesses submitted that the services like courier service, rent-a-cab service, tour and travel services for transportation of their employees. Such services had direct or indirect nexus with the business operations (manufacturing activity) of the company.
- Further, as per Rule 2(l) of the Cenvat Credit Rules, 2004, any service used for clearance of goods from the place of removal is an input service.
Contention of the Revenue:
The learned counsel for the department contended that the assesses failed to establish the nexus between the services and the business activity and, therefore, in the absence of nexus between the two, the appellant is not entitled to take cenvat credit of service tax paid on the services.
Held by CESTAT Mumbai:
- The tribunal observed that all the disputed services activities are related to the assessee’s business activities. Tribunal placed reliance on the decision of Hon’ble Bombay HC in the case of Ultratech Cement Ltd. wherein the court held that input services not only cover services of falling in the substantial part of Rule 2(l) of the Cenvat Credit Rules, 2004 but also cover services which are covered under the inclusive part.
- The inclusive part of the definition includes services rendered in relation to business. Thus, even an indirect nexus of the services with the business operations would make such services as input services under the inclusive part of the definition of input services as provided in Rule (l) of the Cenvat Credit Rules,2004.
Qualification: CA in Job / Business
Location: Hyderabad, Telangana, IN
: 19 Aug 2018 | Total Posts
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