Case Law Details
Case Name : CCE Vs. Ultratech Cement Ltd. (Bombay High Court)
Appeal Number :
Date of Judgement/Order :
Related Assessment Year :
Court: Bombay High Court
Citation: CCE, Nagpur Vs. Ultra tech Cement Ltd. (assessee) [AIT-2010-487-HC]
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Brief :Bombay High Court held in above case that the assessee is entitled to avail Cenvat credit on outdoor ‘catering services’ provided in the factory for employees. Ratio of Maruti Suzuki judgment been applied in the case.
Facts in brief:- The assessee, a manufacturer of cement, availed and utilized Cenvat credit of service tax paid on outdoor catering, towards payment o f excise duty on clearance of manufactured cement.
Question before the Hon’ble Bombay High Court- Whether the assessee was entitled to avail Cenvat credit on ‘outdoor catering services’ provided in the factory for employees of the factory as an input service?
Decision of the Hon’ble Bombay High Court
- The Hon’ble High Court answered the question of law in favor of the assessee by holding that Cenvat credit on ‘outdoor catering services’ could be availed and utilized for payment of excise duty on clearance of the cement manufactured.
- The Hon’ble High Court relied on the fact that under the Factories Act, 1948, it was mandatory for the assessee to provide canteen facilities to the employees working in plant.
- In this regard, the Hon’ble High Court relied on the decision given in the case of Coca Cola India Pvt. Ltd. [2009 (242) ELT 268], wherein it was held that ‘activities relating to business’ fall within the ambit of the inclusive part of the definition of ‘input service’ as per the Cenvat Credit Rules, 2004 (CENVAT Rules).
- Further, the Hon’ble High Court placed reliance on the decision given in the case of Maruti Suzuki Ltd. [2009 (240) ELT 641 (SC)], wherein it was held that services having a nexus or integral connection with the manufacture of final products as well as the business of manufacture of final products would qualify to be input service under the CENVAT Rules.
- The Hon’ble High Court held that the ratio of Maruti (supra) would not apply to decide eligibility to credit on input services but it would only apply in the context of ‘input’. The Hon’ble High Court further held that the definition of ‘input service’ is wider than the definition of ‘input’.
- The Hon’ble High Court held that the Legislative intent was also not to give the definition of ‘input service’ a restrictive meaning and hence ‘input service’ seeks to cover every conceivable service used in the business of manufacturing the final products.
- Thus, held that ‘outdoor catering services’ amounted to services used in relation to the business of manufacturing the final products, and accordingly Cenvat credit of the same was eligible.
- The High Court also held that if the cost of the food is recovered from employees credit to that extent would be inadmissible.
Comments and analysis
- The High Court’s ruling is decisive in interpreting the meaning of the expressions ‘such as’ and ‘activities in relation to business’ used in the definition of input service under CENVAT Rules.
- The High Court has negated the argument of the revenue to apply the judgment of Maruti Suzuki in its entirety and instead followed only the ratio of Martuti Suzuki.
- The Hon’ble High Court’s decision has laid to rest the admissibility of Cenvat credit of service tax paid on outdoor catering services and also the debate on the extent of applicability of Maruti (supra) to the interpretation of ‘input service’.