Outdoor Catering - Eligible input service - Ratio of Maruti Suzuki applicable, not decision
IN a landmark decision, the Nagpur Bench of the Bombay High Court held that outdoor catering is an eligible input service for taking CENVAT Credit. In a major departure from the routine judgements, the High Court held that the ratio of the Supreme Court judgement in the Maruti Suzuki case [] was applicable, the judgement in its entirety would not be applicable as far as input service is concerned.
What constitutes input service had been a bone of contention in many a case before the Tribunal and the High Courts.
In an interesting observation, the Tribunal in the Sundaram Brake Linings case [] had stated,
“Neither biscuits can be considered to be input for manufacture of say a motor vehicle part, or paper or cement, nor the duty paid on biscuits can be allowed as credit for paying duty on such motor vehicle part or paper or cement. The Department's case is that when biscuits are not inputs for motor vehicle part, paper or cement, the service tax paid for supply of biscuits cannot be allowed for paying duty on the motor vehicle parts, paper or cement. I have chosen the real life example of biscuits to illustrate the point that supply of biscuits to the workers engaged in the manufacture of motor vehicle parts, paper or cement cannot be considered as an input service by any stretch of imagination unless the biscuits eaten by the workers can be said to be integrally connected to the manufacture of the finished goods like motor vehicle parts, paper or cement.”
Now, the Bombay High Court has emphatically held that, “ the definition of "input service" is very wide and covers not only services, which are directly or indirectly used in or in relation to the manufacture of final products but also includes various services used in relation to the business of manufacture of final products, be it prior to the manufacture of final products or after the manufacture of final products. To put it differently, the definition of input service is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product.”
We bring you this landmark judgement today with our analysis. Please see Breaking News.
We also bring you today an in-depth analysis of the issue by one of our distinguished commentators, Chennai based Advocate Joseph Prabakar. Please see CENVAT on Input Services – Will the controversy end with Ultratech decision?