2026-VIL-947-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cenvat Credit on Rent-a-Cab Services - Entitlement to input service credit on rent-a-cab services for a telecommunications service provider - Whether services provided by way of renting of a motor vehicle qualify as input services entitling the provider of output services to claim Cenvat credit - HELD - The definition of input services under Rule 2(l) of CCR, 2004 contains specific exclusions in sub-clause (B) which explicitly excludes services provided by way of renting of a motor vehicle insofar as they relate to a motor vehicle which is not capital goods. The legislature has categorically provided for certain services to be excluded from the definition of input services, and such specific exclusions are final and conclusive. Once the legislature manifests its intent by mandating what is excluded from the definition of input services, it shuts the avenue for any contention that such services would otherwise qualify as input services under the main part or inclusive part of the definition. The exclusions stipulated by the legislature, subject to stated exceptions, remain out of the purview of the definition regardless of whether the services might otherwise fall within the broader language of the main or inclusive parts. Therefore, the service provider is not entitled to claim Cenvat credit on rent-a-cab services - The impugned order upholding the demand on rent-a-cab services is upheld - The impugned is modified and to the extent it upholds the demand on rent-a cab services along with applicable interest, it is upheld, and to the extent it upholds the demand on housekeeping services as well as the imposition of penalty, it is set aside – The appeal is partly allowedrnrnCenvat Credit on Housekeeping Services - Whether housekeeping services provided for upkeep and maintenance of premises, including cleaning of equipment essential to the output service, qualify as input services under Rule 2(l) – HELD - The definition of input services in its inclusive part expressly includes services used in relation to premises of a provider of output service or an office relating to such premises. The expressions "includes" and "in relation to" carry wide connotations. The word "includes" is employed by the legislature to bring in, by legal fiction, something within the accepted connotation of the substantive part and must be given a wide interpretation in regard to context. The expression "in relation to" comprises words of comprehensiveness having both direct and indirect significance and ought not be construed restrictively - The fact that housekeeping services also cover general conservancy work does not detract from the reality that such services are essential and are being used for providing output services. Housekeeping services for upkeep and cleanliness of premises in compliance with environmental law and for maintaining premises in an eco-friendly manner cannot be considered inessential for providing output services. There is no bar on such services in the exclusion clauses. Therefore, the service provider is entitled to claim Cenvat credit on housekeeping services. Additionally, considering the appellant is a public sector undertaking and the period involved is immediate to the introduction of amendments in Rule 2(l) when legal confusion prevailed, the imposition of penalty is not justified as the breach flows from a bona fide belief - The impugned order is set aside to the extent it denies Cenvat credit on housekeeping services and the penalty imposed is also set aside.
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