Custom, Excise & Service Tax Tribunal
Idbi Intech Ltd vs Commissioner Cgst And Central ... on 18 August, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Single Member Bench
Service Tax Appeal No. 87417 of 2019
(Arising out of Order-in-Appeal No. MKK/36/RGD APP/2019-20 dated
30.04.2019 passed by the Commissioner of Central Tax, Central Excise &
Service Tax (Appeals), Raigad)
M/s. IDBI Intech Ltd. Appellant
1st Floor, IDBI Building,
Plot No.39-41, Sector 11,
CBD Belapur, Navi Mumbai 400 614.
Vs.
Commissioner of CGST & CE, Belapur Respondent
CGO Complex, 1st Floor, Sector 10,
CBD Belapur, Navi Mumbai 400 614.
Appearance:
Shri Rajiv Luthia, Advocate, for the Appellant
Shri Prabhakar Sharma, Superintendent, Authorised Representative for
the Respondent
CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
Date of Hearing: 18.08.2022
Date of Decision: 18.08.2022
FINAL ORDER NO. A/85708/2022
This appeal is directed against order-in-appeal No.
MKK/36/RGD APP/2019-20 dated 30.04.2019 passed by the
Commissioner of Central Tax, Central Excise & Service Tax
(Appeals), Raigad. By the impugned order, the Commissioner
has upheld order-in-original No. CGST/III/Bel-I/02/DC/AMS/18-
19 dated 31.10.2018 holding as follows:-
"ORDER
"21.1 I disallow the Cenvat credit Rs. 32,51,210/-(Rupees Thirty
Two Lakhs Fifty One Thousand Two Hundred Ten Only) and
determine the same as payable by M/s. IDBI Intech Ltd. under
the provisions of Rule 14(ii) of CENVAT Credit Rules, 2004, read
with Section 73(1) of the Finance Act, 1994 and appropriate the
Rs. 32,51,210/- paid by them vide GAR-7 Challan No. 50105
dated 03/07/2018 against the cenvat credit disallowed.
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21.2 I order the recovery of interest at appropriate rate from
M/s. IDBI Intech Ltd. under the provisions of Rule 14(ii) of
CENVAT Credit Rules, 2004 read with Section 75 of the Finance
Act, 1994 and appropriate the Rs.18,62,142/- paid by them vide
GAR-7 Challan No 50105 dated 03/07/2018.
21.3 I impose penalty of Rs. 32,51,210/-(Rupees Thirty Two
Lakhs Fifty One Thousand Two Hundred Ten Only) on M/s. IDBI
Intech Ltd. under the provisions of Rule 15(3) of the CENVAT
Credit Rules, 2004 read with Section 78 of the Finance Act,
1994."
2.1 The appellant is provider of services under the category of
'information & technology software service', 'commercial training
service' and 'business auxiliary service'. They were also
operating under cenvat credit scheme and availing cenvat credit
of services paid on input services and capital goods received by
them for providing output services. During the course of audit,
it was detected that the appellant has availed inadmissible
cenvat credit of Rs.32,51,210/- of service tax paid on outdoor
catering services during the period 2012-13, from 01.07.2012 to
2017-18 upto June 2018. This is excluded from the definition of
'input service' defined under Rule 2(l) of Cenvat Credit Rules.
Initially the appellant contested the said objection but
subsequently vide their letter dated 04.07.2018 informed that
they have paid the entire amount of Rs.32,51,210/- and the
interest vide GAR-7 challan No.50105 dated 03.07.2018 under
protest. A show cause notice 17.07.2018 was issued to the
appellant asking them to show cause as to why:-
"(i) the inadmissible CENVAT credit totally amounting to
Rs.32.51.210/ (Rupees Thirty Two Lakhs Fifty One Thousand
Two Hundred Ten Only), as detailed in Para 4 above, should not
be disallowed and recovered from them, under the provisions of
Rule 14(ii) of CENVAT Credit Rules, 2004, read with Section
73(1) of the Finance Act, 1994, by invoking the proviso thereto;
(ii) CENVAT Credit of Rs.32,51,210/- paid by them vide GAR-7
Challan No.50105 dated 03/07/2018 should not be appropriated
against the CENVAT Credit disallowed and demanded at (i)
above;
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(iii) interest at appropriate rate, as applicable to the relevant
period, should not be demanded and recovered from them on
the inadmissible CENVAT credit availed and utilized for payment
of Service Tax, demanded in Para 8(i) above, under the
provisions of Rule 14(1) of CENVAT Credit Rules, 2004 read with
Section 75 of the Finance Act, 1994;
(iv) interest of Rs.18,62,142/- paid by them vide GAR-7 Challan
No.50105 dated 03/07/2018 should not be appropriated against
the interest demanded at (iii) above;
(v) penalty should not be imposed on them under the provisions
of Rule 15(3) of the CENVAT Credit Rules, 2004 read with
Section 78 of the Finance Act/1994, for availing and utilizing
inadmissible CENVAT credit totally amounting to Rs.32,51,210/-
."
2.2 The show cause notice was adjudicated by the Deputy
Commissioner as per the order-in-original referred to in para 1
above. Aggrieved, appellant filed appeal before the
Commissioner (Appeals) who has vide the impugned order
dismissed the appeal upholding the order of the Deputy
Commissioner.
3.1 I have heard Shri Rajiv Luthia, Advocate for the appellant
and Shri Prabhakar Sharma, Superintendent (Authorised
Representative) for the Revenue.
3.2 Arguing for the appellant, learned counsel submits that:-
Appellant has engaged near about 1033 employees who
work in 3 shifts and thus the appellant provides 24*7 IT
support services to its clients.
As per Maharashtra Shops and Establishments (Regulation
of Employment & Conditions of Service) Act, 2017 any
establishment employing more than 100 employees is
required to provide canteen facilities to their employees.
Thus, the appellant was under a statutory obligation to
provide catering services to its employees.
According to Rule 2(l) of the Cenvat Credit Rules, 2004
input service means 'any service used by a provider of
output service for providing an output service but excludes
services in relation to outdoor catering when such services
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are used primarily for personal use or consumption of any
employee.'
Appellant was statutorily obliged to provide canteen
services to enable it to carry out its business in due
course. The canteen facilities are used in relation to
business activities of company.
The Tribunal in the case of Hawkins Cookers [2021 (3) TMI
789] has held that the appellant is entitled to avail such
credit provided the amount is paid by it and not collected
from the individual employees to meet the expenses.
In the case of Ganesan Builder Ltd. [2018 (10) TMI 269]
Hon'ble Madras High Court held that the employee
insurance is provided under a statutory requirement
stipulated in Workmen's compensation Act, 1996 which is
a beneficial legislation for the welfare of the employees.
Since it is a statutory requirement, the Hon'ble High Court
held that that the services cannot be held to be used
primarily for personal use or consumption of an employee.
They have recovered the amounts towards catering for
employees at subsidized rate and service tax thereon is
paid. Accordingly the services of canteen becomes the
output services availed and the outdoor catering services
provided by outdoor caterer and hence they should be
eligible to take the credit.
No penalty under Section 78 could be imposed as there is
no mens rea to evade payment of taxes. There is no
suppression in their case and the extended period should
not be invoked.
3.3 Learned Authorised Representative submits that:-
Rule 2(l) defining 'input service' has been amended in
2011 and the outdoor catering services have been
specifically excluded from the category of input services.
In view of this specific exclusion, the credit availed in
respect of such input service is totally irregular and cannot
be allowed.
He relied upon a decision of Hon'ble Supreme Court in the
case of Toyota Kirloskar Motor Pvt. Ltd. [order dated
18.11.2021 in SLP (C) Nos. 17903-17904/2021] wherein
the same view has been expressed.
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He further submits that the appellant has never disclosed
the fact that they were availing credit in respect of outdoor
catering services, to the department and has suppressed
this fact. In view of the fact that this fact was never in the
knowledge of the department, extended period has been
correctly invoked for confirming the demand.
Further, for various contraventions vis-à-vis the appellant
taking credit in respect of inadmissible services, penalty
under Section 78 is warranted.
4.1 I have considered the impugned order along with the
submissions in the appeal and during the course of argument.
4.2 For confirming the demand, the Commissioner (Appeals)
has in the impugned order observed as follows:-
"6.2 Rule 2(l) of Cenvat Credit Rules, 2004 defined input
services which is reproduced below:-
"2(l) - 'input service' means any service:
(i) used by a provider of output service for providing an output
service: or
(ii) Used by a manufacturer.....but excludes;
(A)...............
(B)...............
(BA)............ or
(C) such as those provided in relation to outdoor catering,
beauty treatment, health services, cosmetic and plastic surgery,
membership of a club, health and fitness center, life insurance,
health insurance and travel benefits extended to employee on
vacation such as leave or Home Travel Concession, when such
services are used primarily for personal use or consumption by
any employee"
On perusal of input service definition, it is clear that outdoor
catering service, when such services are primarily used for
personal use or consumption of an employee, then such service
is excluded from the definition of input service. I find that issue
of admissibility of cenvat credit on outdoor catering service with
effect from 01.04.2011 has been examined by the Larger Bench
of the Tribunal in the case of Wipro Ltd. Vs. CCE, Bangalore-III
reported in 2018 (363) ELT 1111 (T-LB) and held that clause( c)
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of Rule 2) is specifically excluded the services provided in
relation to outdoor catering service w.e.f 01.04.2011 although,
such service was covered prior to 01.04.2011. It further held
that once service is not covered due to exclusive clause
irrespective of the fact whether cost of service has been taken as
expenditure in the books of account does not render the service
as an admissible for cenvat credit. Hon'ble CESTAT has also
observed that Food is always for personal consumption only. The
canteen provided in the company is mainly for personal
consumption of the employees and it cannot be interpreted in
any other way. Therefore, once the service in excluded whether
the employer or the employee bear the cost partially or fully has
no bearing on the amendment and accordingly, Hon'ble CESTAT
has disallowed the cenvat credit. Para 7.1 and 7.2 of the said
order is reproduced below:-
"7.1. Further, we find that there is no dispute about the fact that
all these disputes relates to post 2011. The period involved in
the present appeals is admittedly after 2011 and the amendment
to the provisions of Rule 2) defining the input service' came Into
effect from 1 4-2011 only. The definition of Input service post
amendment contains exclusion clause. The exclusion clause was
effective from 1-4-2011 and clause (C) of the said exclusion
specifically exclude the services provided in relation to "Outdoor
Catering Service Admittedly, such services prior to 1-4-2011
have been held to be covered by the definition of input service.
In fact, the need for exclusion would arise only when the
services are otherwise covered by the definition. The Legislature
it its wisdom has excluded certain services from the availment of
Cenvat Credit we.f. 1-4-2011, when such services are otherwise
covered by the main definition clause of the input service. To
interpret the said input clause, in such manner so as to hold that
such services have direct or indirect nexus with the assessee's
business and thus would be covered by the definition would
amount to defeat the legislative intent."
7.2. It is well settled that the legislative intent cannot be
defeated by adopting interpretation which is clearly against such
intent. Further, we find that from the Budget Speech of the
Finance Minister dated 28-2-2011 wherein the Hon'ble Minister
has categorically stated that due to complexities there has been
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many legal issues on the availability of credit on a number of
inputs or input services which are being rationalized by laying
down clear definition so that the scope of inputs and input
services that are eligible and those that are not is clear. Further,
we also find from the clarification issued by the Join Secretary
(TRU) explaining the intention of the Legislature for the changes
brought by way of amendment in the definition of input service.
Further, we also note that primarily the service should be first
covered under the definition of input service and once the
service is not covered due to exclusion clause irrespective of the
fact whether the cost of service has been taken as expenditure
in the books of accounts does not render the services as an
admissible for Cenvat credit. We also find that the food is always
mainly for personal consumption only. The canteen provided in
the company is mainly for the personal consumption of the
employee and it cannot be interpreted in any other way.
Therefore, once such services are excluded. whether the
employer or employee bears the cost partially or fully, has no
bearing on the amendment. Therefore keeping in view above
discussions and the various decisions cited by both the parties,
we are of the considered were that the outdoor catering service
is not eligible for input service credit post amendment dated 14-
2011 vide Notification No. 3/2011, dated 1-3-2011."
I find that above decision has been given by Larger Bench of
CESTAT by taking the cognizance of various other decision given
by various Tribunal on the above issue. Thus, i fed that all the
issues raised by the appellant in the present case has been
answered by Hon'ble CESTAT against the appellant. Therefore,
adjudicating authority has rightly rejected the cenvat credit.
6.3 I find that entire case has been detected by the Audit. There
was a clear cut provision regarding non-availability of cenvat
credit on canteen services due to the exclusion clause undefined
in Rule 21 of Cenvat Credit Rules, 2004 and still the appellant
availed the credit This suppression of facts with intention to avail
credit wrongly is well established and therefore, extended period
has been rightly invoked.
6.4 Since demand sustain, interest is also sustainable. Since
extended period is invokable, the penalty under Rule 15(3) of
Cenvat Credit Rules, 2004 is also imposable. The appellant has
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argued that since they have already paid demand along with
interest before show cause notice, the benefit of Section 73(3)
should be granted to them. find that since demand has been
raised invoking extended period and as discussed above
extended period is invokable, provision of Section 73(3) shall not
be applicable in their case in terms of Section 73 (4) of Finance
Act, 1994. The appellant has also argued that they may be given
the benefit of reduced penalty in terms of 2 Proviso of Section 78
i.e. 15% of the tax amount. I find that benefit of 2 Proviso to
Section 78 can be granted only when amount of such reduced
penalty is also paid within such period. They have not paid
penalty amount. Therefore, benefit of reduced penalty as per
2nd Proviso to Section 78 is not available to the appellant.
However, as per 1 Proviso to Section 78, penalty upto 50% of
the service tax amount shall be imposable up to 14.05.2015 and
100% of the cenvat credit amount after that. Adjudicating
Authority is required to re-quantify the penalty amount."
4.3 The Commissioner (Appeals) has quoted the definition of
input service in the order which I have reproduced above. As
per the exclusion clause, it is very clear that services in relation
to outdoor category have been excluded from the definition of
input service. These services have been used for the personal
use or consumption of the employee of the appellant. Cenvat
credit scheme is a beneficial piece of legislation which allows for
tariff in respect of the taxes paid on the input service and capital
goods used by the manufacturer/service provider to be utilised
for payment of central excise duty or service tax in respect of
the goods manufactured and cleared for that output services
provided. The boundary wall of the scheme has been drawn by
way of defining various services such as input services. The
definition of input services specifically excludes the outdoor
catering services from the purview of the scheme. The
argument that this service has been provided as per the
Maharashtra Shops and Establishments (Regulation of
Employment & Conditions of Service) Act, 2017 cannot be
sustained in view of the specific exclusion provided by the
definition incorporated in the scheme.
9 ST/87417/2019
4.4 This issue came for consideration of Hon'ble High Court of
Karnataka in the case of Toyota Kirolsaka Motor Pvt Ltd {2021
(50) GSTL 286 (Kar)]. Hon'ble High Court held as follows:
"12. This Court has admitted the appeal on the following
substantial question of law :
"Whether the services received by the appellant 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?
13. Heard the Learned Counsel for the parties at length and
perused the record.
14. In the present case the undisputed facts reveal that the
orders passed by the authorities, appellate authority and the
Tribunal are based upon the amendment which came into force
from 1-4-2011. For deciding the controversy in the present case,
the definition of 'input service' prior to amendment and post-
amendment are necessary and they are reproduced as under :
Post 1-4-2011 the definition of 'input service' stood thus :
.....
Prior to 1-4-2011, the definition of 'input service' stood thus :
Rule 2(l) "input service" means any service, -
(i) used by a provider of taxable service for providing an
output service; or
(ii) used by the manufacturer, whether directly or indirectly, in
or in relation to the manufacture of final products and clearance
of final products from the place of removal, and includes services
used in relation to setting up, modernization, renovation or
repairs of a factory, premises of provider of output service or an
office relating to such factory or premises, advertisement or
sales promotion, market research, storage up to the place of
removal, procurement of inputs, activities relating to business,
such as accounting, auditing, financing, recruitment and quality
control, coaching and training, computer networking, credit
rating, share registry, and security, inward transportation of
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inputs or capital goods and outward transportation up to the
place of removal"
15. The undisputed facts make it very clear that the period
involved in the present appeal is admittedly of post-2011 period
and after the amendment to the provisions of Rule 2(l) defining
the 'input service' and the amendment to the provision of Rule
2(l) defining the 'input service' came into effect w.e.f., 1-4-2011.
The definition of 'input service' post-amendment contains
exclusion clause and exclusion clause was effected w.e.f. 1-4-
2011. Clause (c) of the said exclusion clause specifically excludes
the services provided in relation to 'outdoor catering' services. It
is certainly not in dispute that said services prior to 1-4-2011
have been held to be covered by the definition of 'input service',
however, after the amendment came into force in the light of
specific exclusion clause, 'outdoor catering' service is not at all
covered under the definition of 'input service'.
16. Heavy reliance has been placed upon a judgment delivered
by the Madras High Court in the case of Ganeshan Builders Ltd.,
(supra). In the aforesaid case, there was an insurance in
existence and it was not an insurance in individual worker's
name. The Madras High Court has held that the insurance policy
was assessee's specific and not employee's specific and as there
was a mandatory duty casted upon the assessee to establish a
canteen under the Building and Other Workers (Regulation of
Employment and Conditions of Service) Act, 1996, has allowed
the writ petition, whereas, in the present case no such
contingency is involved. In the present case though the
expenses incurred in respect of the canteen services for
providing food and beverages in canteen maintained and run by
the employer is included towards the total cost of the product
and it is certainly required to establish under the Factories Act,
1948 (Section 46), but the fact remains, the canteen has been
established primarily for personal use or consumption of the
employees. There is no ambiguity in the statute and therefore,
as it is a taxing statute, this Court cannot add or substitute
words in the statutory provisions while interpreting the statutory
provision. The statute does not leave any room for any other
interpretation and therefore, in the considered opinion of this
Court, the judgment does not help the appellant in any manner.
11 ST/87417/2019
17. Reliance has also been placed upon a judgment in the case
of Commissioner of Central Excise v. Stanzen Toyotetsu India (P)
Ltd., (supra). However, the aforesaid judgment is distinguishable
on facts as it was delivered in respect of a period prior to
amendment.
18. Similarly, the other judgment relied upon in a case of Resil
Chemicals Pvt. Ltd., (supra). Again it is a judgment involving
pre-amendment era.
19. Reliance has also been placed upon a judgment delivered in
the case of Commissioner of Central Excise v. Solris Chemtech
Ltd., (supra). This Court has carefully gone through the aforesaid
judgment and again the aforesaid judgment does not help the
appellant in the light of specific amendment on the subject.
20. Another judgment over which reliance has been placed is in
the case of Commissioner of Central Excise, Ahemedabad-1 v.
Ferromatik Milacron India Ltd., [2011 (21) S.T.R. 8 (Guj.)]. The
judgment is again distinguishable as it relates to period w.e.f.,
March, 2006 to September, 2006 i.e., period prior to
amendment under the Cenvat Credit Rules, 2004. In the
considered opinion of this Court, the statutory definition of 'input
service' under Rule 2(l) post-amendment w.e.f., 1-4-2011
provides that 'outdoor catering' services falls 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 the assessee.
21. A Taxing Statute has to be strictly construed and in Taxing
Statute one has to look merely at what is clearly said. Justice
G.P. Singh in his land mark work on Principles of Statutory
Interpretation, 14th Edition under the heading Strict
Construction of Taxing Statute, has observed as under :
"General Principles of strict construction
A taxing statute is to be strictly construed. The well-established
rule in the familiar words of LORD WENSLEYDALE, reaffirmed by
LORD HALS-BURY and LORD SIMOND, means : "The subject is
not to be taxed without clear words for that purpose; and also
that every Act of Parliament must be read according to the
natural construction of its words" (Re, Micklethwait, (1885) 11
Ex 452, p.456. In a classic passage LORD CAIRNS stated the
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principle thus : "If the person sought to be taxed comes within
the letter of the law he must be taxed, however great the
hardship may appear to the judicial mind to be. On the other
hand, if the Crown seeking to recover the tax, cannot bring the
subject within the letter of the law, the subject is free, however
apparently within the spirit of law the case might otherwise
appear to be. In other words, if there be admissible in any
statute, what is called an equitable, construction, certainly, such
a construction is not admissible in a taxing statute where you
can simply adhere to the words of the statute". [Partington v.
A.G., (1869) LR 4 HL 100, p.122 : 21 LT 370]. VISCOUNT
SIMON quoted with approval a passage from TOWLATT, J.
expressing the principle in the following words : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". [Cape Brandy Syndicate v. IRC, (1921) 1 KB 64, p.71 (ROWLATT, J.)]. Relying upon this passage LORD UPJOHN said : "Fiscal measures are not built upon any theory of taxation." (Commr. of Customs v. Top Ten Promotions, (1969) 3 ALL ER 39, p.90 (HL)."
22. The Hon'ble Supreme Court has also taken a similar view in large number of cases in respect of Taxing Statutes. [See A.V. Fernandez v. State of Kerala, AIR 1957 SC 657, p.661 : 1957 SCR 837; referred to in CIT, Bombay v. Provident Investment Co., AIR 1957 SC 664, p.666 : 1957 SCR 1141; Gursahai v. CIT, AIR 1963 SC 1062, p.1064 : (1963) 3 SCR 893; See further Banarsi Debi v. ITO, AIR 1964 SC 1742, p.1744 : (1964) 7 SCR 539; CIT, Gujarat v. Vadilal Lallubhai, AIR 1973 SC 1016, p.1019 : (1973) 3 SCC 17; Diwan Brothers v. Central Bank, Bombay, AIR 1976 SC 1503, p.1508 : (1976) 3 SCC 800; McDowell & Co. Ltd. v. Commercial Tax Officer, AIR 1977 SC 1459, p.1465 : (1977) 1 SCC 441; Mohammad Ali Khan v. Commissioner of Wealth Tax, AIR 1997 SC 1165, p.1167 : 1997 (3) SCC 511; Hansraj & Sons v. State of Jammu & Kashmir, AIR 2002 SC 2692, pp.2698, 2699 : (2002) 6 SCC 227; Geo Miller & Co. (P) Ltd. v. State of M.P., (2004) 5 SCC 209, p.216 (para 30) : AIR 2004 SC 3552.] 13 ST/87417/2019
23. Resultantly, this Court has 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.
24. Resultantly, this Court does not find any reason to interfere with the order passed by the Tribunal. The question of law is answered in favour of the revenue and against the assessee. The appeal stands dismissed accordingly."
4.5 Dismissing the SLP filed against the above said order of Hon'ble High Court of Karnataka, Hon'ble Supreme Court observed:
"We have heard Mr. V. Sridharan, learned Senior Counsel appearing for the petitioner.
The statutory provision Rule 2(1) defining "Input Service" post 01.04.2011 is very clear and the out-door catering services when such services are used primarily for personal use or consumption of any employee is held to be excluded from the definition of "Input Service".
In that view of the matter, it cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from input service.
We are in complete agreement with the view taken by the High Court. Hence, the Special Leave Petitions stand dismissed."
4.6 Hon'ble Bombay High Court has in case of Solar Industries India Ltd [2022 (60) GSTL 216 (Bom)] took the note of the above said decisions and observed as follows:
"5. We have heard the Learned Counsel for the parties at length and we have perused the order passed by the Tribunal disallowing the claim for Cenvat credit. It was found by the Tribunal that by virtue of the amendment dated 1-4-2011 rent- a-cab service had been excluded from the definition of the term "input service". The same was in three limbs and the material basis for denying such Cenvat credit was in view of Clause (B) to Rule 2(1) of the said Rules. We find that the Tribunal was justified in disallowing Cenvat credit for the reasons mentioned in the impugned order. This is also clear from a reading of 14 ST/87417/2019 Section 65(105) of the Finance Act which excludes rent-a-cab scheme. The transportation of employees from distance of about 40 kms. for reaching factory is not an activity which could be said to be a part of manufacturing activity. It is merely for personal convenience of the employees to enable them to reach the premises of the factory so as to thereafter participate in the manufacturing activity.
In this regard, the Learned Counsel for the respondent is justified in placing reliance on the judgment of the Karnataka High Court in Toyota Kirloskar Motor Private Limited (supra) wherein food and beverages were provided by the appellant therein to its employees by engaging the services of an outdoor caterer. This was sought to be treated as "input service" since there was a statutory duty on the appellant to establish a canteen for its employees. Considering the effect of definition of "input service" after 1-4-2011 it was found that establishment of such canteen was primarily for personal use or consumption of the employees and after such amendment no Cenvat credit could be availed. This view has been upheld by the Hon'ble Supreme Court while dismissing the Special Leave Petition on 18-11-2021 preferred by the said appellant. The facts of the present case also indicate that the facility of transportation provided by the appellant to its employees was merely in the nature of service for personal use or consumption of its employees.
6. The decisions relied upon by the Learned Counsel for the appellant are clearly distinguishable. In M/s. Essar Oil Limited (supra) there was no dispute by the Department in that case that the services consumed by an assessee were related to various stages of its manufacturing and business activities. The same is not the case herein. The other decision in Mangalore Refinery & Petrochemicals Ltd. (supra) pertains to availing of service tax credit prior to 1-4-2011.
7. Thus considering the material on record, we find that the Tribunal did not commit any error whatsoever in disallowing Cenvat credit to the appellant after 1-4-2011 in view of the amended provisions. The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as "input service"."
15 ST/87417/2019 4.7 The issue was also considered by the Larger Bench of this Tribunal in the case of Wipro Ltd. [2018 (363) ELT 1111 (Tri.- LB)] and the bench specifically concluded as follows:
"The Single Member vide its order dated 24-7-2017 [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] has observed that there are divergence of views on the issue of availability of service tax on "outdoor catering services" and consequently, he has referred the matter to the President for constituting a Larger Bench to settle the issue of law. The reference order [2018 (9) G.S.T.L. 285 (Tri.-Bang.)] is reproduced herein below :
"2. The issue involved in this case is regarding availability of Cenvat credit of the service tax paid on "outdoor catering service". The appellant herein are an industrial unit having a manufacturing/service provider unit wherein they engaged the services of outdoor catering service for providing the catering services to their employees. Such service provider raised the bill along with service tax for which they availed the Cenvat credit. Department is of the view that such Cenvat credit cannot be availed after the provisions of Rule 2(l) of Cenvat Credit Rules, 2004 are amended which restricts availment of Cenvat credit in respect of "outdoor catering service".
3. Learned counsel relies upon the judgment of the Tribunal in the case of M/s. Hindustan Coca Cola Beverages Pvt. Ltd. - 2016-TIOL-2223-CESTAT-HYD. wherein the Bench took a view that the canteen service needs to be provided by an employer within the factory premises in compliance with the provisions of the Factories Act, 1948, hence any service tax paid therein, credit is to be allowed.
4. However, the Tribunal in the case of AET Laboratories Pvt. Ltd. - 2016 (42) S.T.R. 720 (Tri.-Bang.), in a similar situation has held that consequent to the amendment to Rule 2(l) of CCR, 2004, the position is different and the Cenvat credit cannot be permitted to be availed. Since there is divergence of view in the Benches of Tribunal on the very same issue, I find that the matter should be referred to President for constituting a Larger Bench and 16 ST/87417/2019 settling the law on the issue. Registry is directed to put up this order along with referred case laws to the Hon'ble President for constituting a Larger Bench to resolve the conflict between the two Benches."
2. Thus, the issue referred for consideration of this Larger Bench is whether "outdoor catering service" is eligible for input Service Tax credit post amendment 1-4-2011 vide Notification No. 3/2011, dated 1-3-2011.
7.1 Further, we find that there is no dispute about the fact that all these disputes relates to post 2011. The period involved in the present appeals is admittedly after 2011 and the amendment to the provisions of Rule 2(l) defining the 'input service' came into effect from 1-4-2011 only. The definition of 'input service' post amendment contains exclusion clause. The exclusion clause was effective from 1-4-2011 and clause (C) of the said exclusion specifically exclude the services provided in relation to "outdoor catering service". Admittedly, such services prior to 1-4-2011 have been held to be covered by the definition of 'input service'. In fact, the need for exclusion would arise only when the services are otherwise covered by the definition. The Legislature in its wisdom has excluded certain services from the availment of Cenvat credit w.e.f. 1-4-2011, when such services are otherwise covered by the main definition clause of the 'input service'. To interpret, the said input clause, in such manner so as to hold that such services have direct or indirect nexus with the assessee's business and thus would be covered by the definition, would amount to defeat the legislative intent.
7.2 It is well settled that the legislative intent cannot be defeated by adopting interpretation which is clearly against such intent. Further, we find that from the Budget Speech of the Finance Minister dated 28-2-2011 wherein the Hon7ble Minister has categorically stated that due to complexities there has been many legal issues on the availability of credit on a number of inputs or input services which are being rationalized by laying down clear definition so that the scope of inputs and input services that are eligible and those that are not, is clear. Further, we also find from the clarification issued by the Joint Secretary (TRU) explaining the intention of the Legislature for the changes brought by way of amendment in the definition of 'input service'.
17 ST/87417/2019 Further, we also note that primarily the service should be first covered under the definition of 'input service' and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for Cenvat credit. We also find that the food is always mainly for personal consumption only. The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded, whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. Therefore, keeping in view [the] above discussions and the various decisions cited by both the parties, we are of the considered view that the "outdoor catering service" is not eligible for input service credit post amendment dated 1-4-2011 vide Notification No. 3/2011, dated 1-3-2011."
4.8 In view of the express provision of Rule 2 (l) defining the input services to exclude the outdoor catering services, and the decision of larger bench of tribunal in case of Wipro Ltd., referred above the decision rendered by the Single Member Bench in case of Hawkins Cookers [2021 (52) G.S.T.L. 137 (Tri.
- Mumbai)] is per incurriam and cannot be relied upon as binding precedence. The view expressed in the case of Wipro Ltd., has been approved by the Hon'ble High Court of Karnataka, Hon'ble High Court of Bombay and Hon'ble Supreme Court.
4.9 In view of above I do not find any merits in the submissions made by the counsel in respect of admissibility of credit.
4.6 On the issue of limitation, it is observed that the appellant had nowhere declared in respect of the credit being taken by them in respect of outdoor catering services. The argument that they have been paying service tax on the subsidized rate treating canteen services as their output services is without any merits. Form ST-2 mentions the appellant to be providing following services only:-
Types of Services Accounting Codes
Sr. Tax Other Penalties
No. Collecti Receipts
on (Interest)
Manpower recruitment/supply agency 0044 00440061 00441311
18 ST/87417/2019
service 0060
Online information and database access 0044 00440154 00441333
service and/ or retrieval service through 0153
computer network
Commercial training or coaching 0044 00440230 00441374
0229
Maintenance or repair service 0044 00440246 00441388
0245
Business auxiliary service 0044 00440226 00441371
0225
4.7 Even the adjudicating authority has in the order recorded
the following:-
REVERSAL MADE
BY THE ASSESSEE BALANCE
TO THE EXTENT OF CENVAT
REVERSAL MADE
CONTRIBUTION CREIT
BY THE ASSESSEE
TOTAL MADE BY THEIR DEMANDED
TO THE EXTENT
CENVAT EMPLOYEES AFTER UNDER
Year OF CONTRIBUTION
CREDIT AUDIT OBJECTION PRESENT
MADE BY THEIR
AVAILED (OBJECTION SCN
EMPLOYEES ON
ACCEPTED AND (OBJECTION
THEIR OWN
LETTER FOR NOT
WAIVER ACCEPTED)
OF SCN IS GIVEN)
2012-13 7,11,425 -- 2,59,246 4,52,179
2013-14 8,81,272 -- 2,69,150 6,12,122
2014-15 7,68,572 31841 2,31,132 5,37,440
2015-16 8,6,160 2 96,442 -- 5,64,718
2016-17 10,74,025 3,62,292 -- 7,11,733
2017-18
5,14,511 1,09,652 -- 4,04,859
(till
30/06/2017
TOTAL 48,10,965 8,00,227 7,59,528 32,51,210
4.8 It was during the course of audit that this fact came to
light that the appellant had availed the cenvat credit in respect of the excluded services. On specific query made by the Bench in this regard to the counsel as to produce any document to show that the fact of availment of cenvat credit was brought to the notice of the department earlier, the counsel replied in negative. The issue of limitation is the question of fact based on the existence of the ingredients provided by Section 73 of Finance Act, 1994 for invoking the extended period of limitation. The facts which were in the knowledge of the appellant but not disclosed at any time to the Revenue would be a suppression of fact with intention to evade payment of service tax. I am very clear in my mind that the demand made invoking extended period of time can be sustained. Even otherwise in the present case the appellant has deposited this amount on 03.07.2018 and 19 ST/87417/2019 the show cause notice was issued on 18.07.2018. Sub section 3 to Section 73 of the Finance Act, 1994 reads as follows:
"(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid :
Provided that the Central Excise Officer may determine the amount of short-payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "thirty months" referred to in sub- section (1) shall be counted from the date of receipt of such information of payment.
Explanation.1-- For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section.
Explanation 2. -- For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. I do not see any merits in the contention of the appellant in this regard."
As per the first proviso to this sub section, revenue could have issued the show cause notice in respect of the amount remaining short paid/ not paid in respect of which appellants have deposited the amounts on their own assessment or on being pointed out upto thirty months from the date of receipt of 20 ST/87417/2019 information in respect of payment. Since the appellants had paid the amount under protest and the show cause notice was issued to them within less than a month the same cannot be said to be hit by bar of limitation.
4.9 I also take note of the fact that on being pointed out by the audit, the appellant has deposited the entire amount of the tax due along with the interest under protest. The amounts paid have been appropriated by the order-in-original against the demand. As the entire amounts along with interest have been paid prior to issuance of the show cause notice, in view of the Explanation 2 to the above referred sub section (3), I do not find merit in the penalty imposed on the appellant under section 78 and set aside the same.
5.2 Appeal is partly allowed to the extent of setting aside the penalty imposed under Section 78 of the Finance Act, 1994.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) tvu