Gujarat High Court
The Principal Commissioner vs M/S.Essar Oil Limited....Opponent(S) on 9 December, 2015
Author: Akil Kureshi
Bench: Akil Kureshi, Mohinder Pal
O/TAXAP/939/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 939 of 2015
==========================================================
THE PRINCIPAL COMMISSIONER....Appellant(s)
Versus
M/S.ESSAR OIL LIMITED....Opponent(s)
==========================================================
Appearance:
MR YN RAVANI, ADVOCATE for the Appellant(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE MOHINDER PAL
Date : 09/12/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Revenue has challenged the judgment of CESTAT dated 24.02.2015 raising the following questions for our consideration:
"A. Whether in the facts and circumstances of the case, was the Tribunal right in law to allow the Cenvat Credit of Service Tax availed on the services of 'Rent-a-cab', 'Tour Operators', and 'Travel Agent' to the respondent when these were not used in or in relation to the manufacturing and clearances of the final products 'from OR upto the place of removal'?
B. Whether in the facts and circumstances of the case, was the Tribunal right in law to allow the Cenvat Credit of Service Tax availed by the respondent on the services on the principle that the cost of services formed part of production of the goods by ignoring the definition of 'input services'; especially when it is a settled proposition of law that the Page 1 of 5 HC-NIC Page 1 of 5 Created On Fri Dec 11 01:44:26 IST 2015 O/TAXAP/939/2015 ORDER Cenvat Credit Rules and the valuation provisions are independent of each other? "
2. Essentially, the issue pertains to the respondent/ assessee availing Cenvat Credit of Service Tax paid by them on various services, such as 'Rent-a-Cab', 'Tour Operators', and 'Travel Agent' hired by them. Case of the Revenue appears to be that such services cannot be described as having been used in or in relation to manufacturing and clearances of final products.
3. Before the adjudicating authority, the assessee explained its stand as under:
"4. Rent a Cab Operators Service/ Tour Operator Services/ Travel Agent Services: This service is pertaining to the hiring of vehicles, which are used by their employees for their movement within the refinery premises or for outward traveling in connection with out business. It is submitted that the vehicles are always hired for the purpose of travel by employees for discharging their responsibilities which are always either in connection with our manufacture/ business. It is further submitted that it will be impossible for a refinery of our size to operate without having basic transportation facilities for internal movement of employees, which is essential to carry out the manufacturing activity. Further, the employees are required to undertake various business travels, without which it is impossible to carry the business. In view of the above, the nexus between this service and our manufacturing activity/ business cannot be ignored and the proposal to deny the credit on this input service is not tenable in law and on facts..."
4. The adjudicating authority in a detailed discussion held and observed as under:
"....The issue involved in the instant cases is whether the noticee is Page 2 of 5 HC-NIC Page 2 of 5 Created On Fri Dec 11 01:44:26 IST 2015 O/TAXAP/939/2015 ORDER entitled to the Cenvat Credit of service tax paid on certain services as availed by them in the guise of input service as per definition given in rule 2 (1) of the Cenvat Credit Rules, 2004. Such services, of which eligibility as input service for availing cenvat credit is to be decided, are collectively mentioned hereunder, for both the show cause notices:
".....In view of the above, I find nothing contrary to the ratios of various judgments relied upon by the noticee in the facts and circumstances of instant cases rather observe substance in the contention of the noticee for having all the above eleven activities related to their business directly or indirectly well within the purview of 'input service' as defined under rule 2 (1) of the Cenvat Credit Rules, 2004.
Further, I find no dispute in both the show cause notices regarding availment of all the above services by the noticee and consumed by themselves at various stages of their business activities, cost of which is also undisputedly borne by them and form a part of value of goods so manufactured. Therefore it is evidently clear that the associated liability would be discharged by the noticee and benefits, if any, would be available to the noticee, of course including cenvat credit to the extent of servie tax suffered on such services, if they have paid in compliance with the provision of rule 4 (7) of the Cenvat Credit Rules, 2004. I also find no dispute regarding non-payment of such bills to the providers of the service.
In the light of the foregoing discussions, I find that all the eleven services being contended hereinabove for availing cenvat credit of service tax paid thereon are eligible input service in the given circumstances and within the purview of meaning assigned to 'input service' in the rule 2 (1) of the Cenvat Credit Rules, 2004. Therefore the noticee is entitled and has correctly availed cenvat credit available on all the eleven services under the Cenvat Credit Rules, 2004."
Page 3 of 5
HC-NIC Page 3 of 5 Created On Fri Dec 11 01:44:26 IST 2015
O/TAXAP/939/2015 ORDER
5. In appeal, the appellate authority also upheld the view of the adjudicating authority, upon which further appeal was filed before the Tribunal. The Tribunal, by the impugned judgment, dismissed the appeal in the following terms:
"3. On perusal of the impugned order, I find that the issue involved is denial of input service credit on Outdoor Catering Service, Rent-a-Cab service and Travel Agent Service. Both the authority below allowed the credit following various decisions of the Tribunal. Revenue in their grounds of appeal stated that the Commissioner (Appeals) followed by the decision of the Tribunal in the cae of CCE, Mumbai v. M/s.GTC Industries Ltd. 2008 (12)S.T.R.468 (Tribunal-LB). It is contended that the decision of the Larger Bench in the case of GTC Industries (supra) does not appear to correct. In my considered view, the Single Member Bench of the Tribunal cannot make any observation on the correctness of the decision of Larger Bench of the Tribunal. In any event, I find force in the submission of the Learned Authorised Representative of the Revenue in respect of denial of Cenvat Credit on Outdoor Catering Service, as per decision in the case of Commissioner of Central Excise, Nagpur V/s Ultratech Cement Ltd. 2010 (20) S.T.R. 577 (Bom.). In that case, it has been held that the assessee is not eligible to avail the credit on the Outdoor Catering Service on the employees share.."
6. From the record it does emerge that there was no dispute even by the Department on the issue that the assessee had consumed for itself various services at various stages in their manufacturing and business activities. Cost was born by the assessee which also formed a part of the value of the goods manufactured.
7. Rule 2 (l) of the Cenvat Credit Rules, 2004 defines "input Page 4 of 5 HC-NIC Page 4 of 5 Created On Fri Dec 11 01:44:26 IST 2015 O/TAXAP/939/2015 ORDER service". This definition is couched in means and includes the expression. The definition 'input service' would mean, any service used by the provider of output service, or used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal, and would include various services specified in the said definition. Thus, the term 'input service' would mean any service used by the manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final product from the place of removal.
8. In view of such broad definition, three authorities below concurrently, and in our opinion correctly, found that the service in question was 'input service' and the service tax paid thereon would be available to the assessee by way of Cenvat Credit. No question of law, therefore, arises. Tax Appeal is dismissed.
Sd/-
(AKIL KURESHI, J.) Sd/-
(MOHINDER PAL, J.) KMGThilake) Page 5 of 5 HC-NIC Page 5 of 5 Created On Fri Dec 11 01:44:26 IST 2015