After 01/04/2011, CENVAT credit of "rent-a- cab" service is not allowed due to specific exclusion of the same from definition of input services in terms of Rule 2(I)(B) of CENVAT Credit Rules, 2002, although it is essential for providing output services, but all other services essential for providing output services are to be allowed.
Pathik Shah
Commissioner of Service Tax, Mumbai-II vs. MMS Maritime (India) (P.) Ltd [2016] 65 taxmann.com 196 (Mumbai-CESTAT)
After 01/04/2011, CENVAT credit of "rent-a- cab" service is not allowed due to specific exclusion of the same from definition of input services in terms of Rule 2(I)(B) of CENVAT Credit Rules, 2002, although it is essential for providing output services, but all other services essential for providing output services are to be allowed.
FACTS:
The Appellant is the provider of manpower supply services to foreign clients which is export of service. It filed refund claim for unutilized CENVAT credit in respect of input services, which was used in respect of export of output services. Such services included inter-alia rent-a-cab services used for conveyance of employees, courier services, communication services, renting of immovable property services and short term accommodation services used in relation to training. The refund claim was rejected on the ground that such services do not qualify as input services for providing output services.
HELD:
The Tribunal held that any service whether it is used for providing output services or otherwise, cannot be decided in isolation but it is necessary to see what the output service is and accordingly it can be decided whether the service is input service for providing a particular output service. Having regard to nature of output service i.e. manpower supply service, it was held that, all the services mentioned above, are essential for providing output service and hence would qualify as input services and CENVAT credit of the same are allowable/refundable. However, in light of amendment to Rule 2(I) (B) of CENVAT Credit Rules, 2004 with effect from 01/04/2011, on account of specific exclusion, "rent-a-cab" services would not qualify as input services even though the same are used for conveyance of staff.
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