2026-VIL-1291-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cenvat Credit – Eligibility of input services on cleaning, insurance, club association, event management, outdoor catering, health and fitness and other services – Appellant bank availed Cenvat credit on various input services including cleaning, club or association, convention, event management, general insurance, health and fitness, insurance auxiliary, mandap keeper, outdoor catering, rent a cab and tour operator services for the period April 2009 to September 2015 – Adjudication Authority confirmed demand for ineligible input services claiming such services do not fall within definition of input services and were not directly connected with output services – Whether disputed services qualify as input services under Rule 2(l) of Cenvat Credit Rules 2004 for the periods prior to 01.04.2011 and post 01.04.2011 – HELD – Prior to 01.04.2011 the definition of input service was broad and included services used in activities relating to business providing expansive scope for services having reasonable nexus with business of providing output services – After 01.04.2011 significant narrowing occurred with deletion of phrase activities relating to business and introduction of express exclusion clause denying credit for services for employees personal use and consumption including outdoor catering, health insurance, club membership – Post 01.04.2011 admissibility of credit must be tested in three stages namely whether service falls within main part of definition, whether covered by inclusive part and whether barred by exclusions – Cleaning service including housekeeping and maintenance of office premises is eligible as it is not personal in nature – General insurance premium for cardholders against fraudulent transactions and theft is integrally connected with credit card services and eligible – Convention services and event management services related to business strategy and sales promotion are eligible – Club and association membership services for personal benefit and employee welfare are not eligible as they are excluded for personal use or consumption – Health and fitness services provided as employee welfare are not eligible as expressly excluded for personal consumption – Outdoor catering services are not eligible as held by Supreme Court in Toyota Kirloskar Motor – Rent a cab and tour operator services are not eligible as they constitute personal convenience excluded from definition – Insurance auxiliary services to extent used for employee personal use are not eligible – Mandap keeper service claimed as part of sales promotion is eligible – Matter remanded to Original Authority for re-quantification of demand limiting to normal period - Extended period of limitation – The extended period of limitation cannot be invoked as dispute is interpretational in nature involving bona fide interpretation of Rule 2(l) with extensive judicial precedents and Board circulars clarifying scope – Suppression of facts must be wilful and deliberate with intent to evade duty and mere omission or failure to disclose without such intent is insufficient – Interest is payable only where wrongly availed credit is also utilized and not merely taken wrongly as per Notification 18/2012-CE – Penalties are set aside as dispute involves interpretational issues – Matter remanded to Original Authority for re-quantification of demand limiting to normal period and determining interest based on verification of whether net Cenvat credit balance fell below demanded amount
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