Custom, Excise & Service Tax Tribunal
M/S Tata Management Training Centre vs Cce, Pune Iii on 22 July, 2014
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. ST/268/11 (Arising out of Order-in-Appeal No. PIII/VM/364/2010 dated 21.12.2010 passed by the Commissioner of Central Excise (Appeals) Pune III.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Tata Management Training Centre
: Appellant
Versus
CCE, Pune III
: Respondent
Appearance
Shri Bharat Raichandani
: For Appellant
Shri B.K. Iyer, Superintendent (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 22.07.2014 Date of Decision: 22.07.2014
ORDER NO.......................................................
Per: Anil Choudhary:
Appellant have file this appeal against Order of the Commissioner (Appeals) Central Excise Pune, Order in Appeal No. PIII/VM/364/2010 dated 21.12.2010.
2. The appellant is M/s Tata Management Training Centre, at Pune (hereinafter referred to as the appellant) holding a Certificate of Registration bearing No. AAACT3991JST002 as required under the provisions of Section 69 of the Finance Act, 1994 as amended, for the purpose of payment of Service Tax as required under Section 68 of the Finance Act, 1994 (hereinafter referred to as the Act) for the services viz., for (1) Training and Coaching, (2) Management Consultants and (3) Convention Services as defined under Section 65 (27), (65) and (32) respectively of the Finance Act, 1994 and also availing the benefit of CENVAT credit under the provisions of CENVAT credit Rules, 2004.
3. In the course of scrutiny of records by the Revenue, it was seen that the appellant have taken CENVAT Credit in respect of inputs services being (1) maintenance of pond and garden, (2) Extension of Road, (3) Brokerage amount on account of purchase/lease of flats for faculty, (4) Fabrication, fencing of compound, (5) Jogging Track repairs which does not appear to be the input services used for the output services rendered by the appellant. Show-cause notice was issued on 01.10.2007 invoking the extended period with respect to credit availed during the period June 2005 to March 2007, directing to the appellant to show cause as to why an amount of Rs. 2,01,173/- along with interest should not be recovered, being inadmissible amount of credit availed along with interest and why not penalty be imposed for the period June, 2005 to March, 2007. The appellant contested the show cause notice. The appellant explained in its reply the credit for inputs service is availed on the basis of proper invoices raised by the Service provider. Further, such services have been utilised in its activity of providing taxable output services. The input services in question are covered by the inclusive parts of the definition of input service. The Adjudicating authority examined the definition of input service as defined in Rule 2 (l) of CENVAT credit Rules and observed as follows:-
Quote Definition of input service has been split into two parts. First part states that where any service is used for providing an output service the service would qualify as input service. Therefore, any service having direct nexus in providing output service will get covered in first part. Whereas, several services having an indirect nexus with the output service but is used in activities relating to business of the provider of output services will get covered in second part of the definition. In view of this, if any service is used for providing the output service, CENVAT credit is admissible.
In the present case CENVAT credit has been claimed by the Noticee in respect of Training and Coaching, Management Consultants and Convention Services Noticee have utilized the credit on output services such as 1) maintenance of pond and garden, (2) Extension of Road, (3) Brokerage amount on account of purchase/lease of flats, (4) Fabrication, fencing of compound, (5) Jogging Track repairs. Noticee have claimed that the maintenance of pond and garden, extension of roads, fabrication, fencing of compound, jogging track repair services have been used by them in maintaining/renovating/repairing of their training campus in good running condition for purpose of providing output services of Training and Coaching, Management Consultants and Convention Services and these activities relate to their business. Further the services of brokerage for purchase/lease of flats are for procuring residential accommodation for their-in-house faculty members who take lectures in their training programme and this service is also sued for providing output service. On this point I have observed that unless and until the premises are maintained in good and running condition for the purpose of output services i.e. Training and Coaching, Management Consultants and Convention Services.
Further the second part of the definition clearly includes the services provided by Noticee as the said services includes services used in relation to setting up modernization, renovation or repairs of a factory, premises of provider of output service. On the basis of above discussions I hold that Training and Coaching, Management Consultants and Convention Services have direct or indirect connection and are essentially required for the output service. In view of above, I believe that Training and Coaching Convention Services are covered as input service under clause (ii) of the Rule 2(1) of the Credit Rules. As I have already concluded that in the present context the Training and Coaching, Management Consultants and Convention Services are covered under the second part of the definition of input service Rule 2(1) of the Credit Rules. There is no need to discuss the admissibility of the said service as input service under the definition. Unqote
4. The Adjudicating authority observed in the facts and circumstances, extended period is not invocable and was pleased to drop the proceeding.
5. Being aggrieved by the Order-in-Original, the Revenue preferred appeal before the Commissioner (Appeals) on the following grounds:-
i. That services of brokerage for purchase/lease of flats are for procuring residential accommodation outside their business premises for faculty members and not for the activities of their business.
ii. The Revenue submits that there is no nexus of services of brokerage for purchase/lease of flats are for procuring residential accommodation with the output service of commercial training and coaching services, management consultancy or convention services.
iii. The Revenue further submitted that the above said service is only a staff welfare activity. Thus the said service is in no way concerned either directly or indirectly to the output service and hence such input service does not fall within the ambit of definition of input service in terms of Rule 2 of the CENVAT credit Rules, 2004.
iv. Authority on Advance Rulings (AAR) in its decision reported in 2008 (232) ELT 169 (AAR) has held that provision of building for housing, schooling, recreation etc. for workers is a welfare measure having no nexus with manufacture, storage or sale-construction of quarters for workers not an input service-Rule 2(1) of the CENVAT Credit Rules, 2004.
v. The Revenue submitted that in view of the above order in original issued by the Assistant Commissioner, Service Tax is not proper, legal and correct.
vi. The Revenue finally prayed for modifying the impugned order in original by disallowing the CENVAT credit of Rs. 15,940/- (Service Tax) and Rs. 319/- (E. Cess) availed on brokerage service for purchase/lease of flats for procuring residential accommodation by the respondent on and confirm the demand to that extent.
6. The Commissioner (Appeals) vide the impugned order was pleased to disallow the CENVAT credit availed in respect of services of the broker utilised for purchased/lease of flats for the purpose of procuring residential accommodation for their faculty, holding that it is in the nature of staff welfare expenses, relying on the Ruling AAR in the case of VMT Spinning Co. Ltd. 2008 (232) ELT 169 (A.A.R.). Being aggrieved the appellant assessee have filed the present appeal.
7. The appellant states that no training can be imparted without the faculty being available. The appellant is engaged in providing training which is its output service. So any expenses incurred by it for input services for ensuring the availability of faculty by way of brokerage expenses for securing residential accommodation for the faculty or any other similar expenditure like advertisement expenses for recruiting faculty, etc. are allowable as input service. That further appellant relies upon the Ruling of the Honble Karnataka High Court in the case of Toyota Kirloskar Motor Pvt. Ltd. 2011 (24) STR 645 (Kar.) wherein Toyota had availed input services being expenses on service availed for celebrating Rajyostava Day in the nature of shamiana, food/snacks expenses, photography and entertainment. It was observed by the Hon'ble High Court of Karnataka, it is common experience that where such occasions were not celebrated there occurs trouble both inside and outside factory. In such circumstances celebration of such occasions cannot be separated from the business of manufacture. They also relied on the Ruling of the Honble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. 2010 (20) STR 577 and observed, to find out whether there is nexus or integral connection with the manufacture of final products, we have to keep in mind the exhaustive definition contained in input service and then the word used in, there in, that is, the activity relating to business and then decide whether any particular service constitutes input service.
8. That appellant further relies on the ruling of this Tribunal in the case of Zee Telefilms Ltd. 2006 (4) STR 349 (Tri.- Mumbai) wherein it has been held that Rulings of Advance Authority, they are binding only on parties concerned and are not a precedent on persons not party therein.
9. The ld. AR relies on the impugned order and also relies on the Ruling of AAR in the case VMT Spinning Co. Ltd. (supra).
10. Having considered the rival contentions, I find that the expenses incurred for input service by the appellant by way of brokerage for finding accommodation for its faculty is related to its output service of providing training. The appellant cannot provide the output service of training without having the faculty available for the same. Thus the impugned order is set aside. The appeal is allowed with consequential relief, if any.
(Dictated and pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 7