Commissioner of Central Excise vs HCL Technologies

The Revenue is in appeal against an order of the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal) dated 28 January, 2014. The question of law which has been raised is as follows:

"Whether the Hon''ble CESTAT was justified in holding that the fact of that the input credit in respect of services i.e. subscription paid for International Taxation, Consultancy Service, Medical Group Insurance Services, Outdoor Catering Service, Advertisement Service & Sponsorship Service in the instant case, would be admissible to the party according to the Cenvat Credit Rules, 2004 especially when "input service" as defined under Clause (I)(c) of Rule 2 of Cenvat Credit Rules, 2002 as amended means any service used by provider of (output service) for providing an output service and excludes the input service such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee."

At the outset, it must be noticed that the question of law has been framed by the Revenue on the basis of the amended definition of the expression "input service" under Rule 2(1) of the Cenvat Credit Rules, 2004 (there is a wrong reference to the Rules 2002 in the question as framed). Be that as it may, the amended definition was substituted by a Notification No. 3/2011-C.E. (N.T.) dated 1 March, 2011 w.e.f. 1 March, 2011. The period to which the dispute relates is January, 2011 to March, 2011. Hence, there is evidently a misconception on the part of the Revenue in formulating the question of law on the basis of an amended definition.

The question as framed relates to the following categories of services:

"(i) Medical Group Insurance Services;

(ii) Consultancy Services;

(iii) Outdoor Category Services;

(iv) Subscription for International Taxation

(v) Advertisement Service & Sponsorship Service."

Insofar as the Medial Group Insurance is concerned, this is governed by two decisions of the Karnataka High Court in Commissioner of Central Excise Vs. Stanzen Toyotetsu India (P) Ltd., and in Commissioner of C. Ex., Bangalore-II Vs. Millipore India Pvt. Ltd., . The service has been held to fulfill the description of the expression "input service".

As regards Consultancy Services, these were comprised of the payment of invoices of the charges involved in relation to the filing of the tax return in the US. The Commissioner held that the service was governed by the definition of "input service". The second related to Legal Consultancy Services which have also been held to fulfill the definition of the expression "input service". Both are admissible.

The next category is Outdoor Catering Services. The Commissioner furnished a cogent justification for allowing the Cenvat credit save and except for a partial disallowance in respect of the consumption of alcoholic beverages. In this regard, reference may be made to the decision of the Gujarat High Court in Commissioner of Central Excise Vs. Ferromatik Milacron India Ltd.,

The next category was Subscription for International Taxation. This was an amount paid to a service provider of Rs. 38,759/- for providing information and knowledge pertaining to International Taxation for tax compliance. This fulfills the description of the expression "input service" in the Rules.

As regards ''Advertising and Sponsorship Services'', the Tribunal has restored the proceedings to the adjudicating authority for being dealt with in accordance with the relevant judgments on the subject. Hence, for the aforesaid reasons, no substantial question of law would arise. The appeal is, accordingly, dismissed. There shall be no order as to costs.