Credit of duty paid on outdoor catering services provided for employees of factory is eligible. (Visteon Powertrain Control Systems (P) Ltd. 2016 (41) S.T.R. 168 (Mad.)
- Background: Credit on outdoor catering disallowed contending that amendment in the definition of input service restricting credit on outdoor catering service is applicable prior to 1.4.2011.
- Issue: Whether credit of duty paid outdoor catering services is eligible to assessee?
- Decision: Outdoor catering services fall within the definition of input service as held in case of Ultratech Cement Ltd by same court. Amendment in the definition restricting the credit on outdoor catering for personal consumption of employee cannot be made applicable retrospectively.
Comment: There are few judgments pertaining to period post 1.4.2011 in favor as well as against the eligibility of credit on catering service. One could claim credit and reverse under protest till judicial clarity emerge so that credit is not lost on time limitation.
2. Credit need not be distributed pro-rata to taxable turnover among all units by input service distributor (CCE Ahmadabad Vs Dashion Ltd. 2016-TIOL-111-HCAHM-ST)
- Background: Assessee distributed Cenvat credit to its units not pro-rata to their turnover. Department contented that credit is to be distributed on a pro-rata basis among various unit of the assessee
- Issue: Whether credit required to be distributed on a pro-rata basis?
- Decision: There was no such restriction in Rule 7 of the Cenvat credit Rule during the period of dispute and hence no requirement to distribute credit on pro-rata basis of the turnover.
Comment: Rule 7 of the Cenvat Credit Rules got amended in 2014 where the manner of distribution based on the turnover of different units has been specifically provided. The ratio of above judgment may not be applicable post amendment.
TRIBUNAL
3. Credit can be taken on the basis of invoice addressed to unregistered premise (Toll (I) Logistics Pvt. Ltd. 2016 (41) S.T.R. 80 (Tri- Mumbai)
- Background: Assessee engaged in “Clearing and Forwarding” availed credit on input services on basis of bills having address of its other unregistered unit. Service tax was paid from premise where output services have been provided.
- Issue: Whether credit could be allowed on bills address to unregistered unit?
- Decision: There was no lapse in payment of tax and filling of Return. Other unit also belongs to the assessee. Once the substantive provisions are complied with, credit cannot be denied on technical ground.
Comment: Department objects to credit availment on technical grounds during audit. Courts have consistently held that credit cannot be denied on technical grounds.