The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai, allowed the CENVAT credit of service tax paid on corporate memberships of clubs.
The appellants, M/s Emco Ltd, were manufacturer of transformers and are availing the facility of CENVAT Credit. The appellants were issued with show cause notice for the period from August 2006 to November 2007 proposing to deny CENVAT Credit of Service Tax paid on services such as Outdoor Catering Service, Rent-a-Cab Service, Club or Association Service and services availed to provide food coupons to the employees which is described by appellant as Hospitality Service.
The original authority dropped the proceedings initiated against the show cause notice. Revenue preferred an appeal before the Commissioner (Appeals). Commissioner (Appeals) allowed the appeal filed by the Revenue and set aside the order passed by the original authority and disallowed CENVAT Credit of Service Tax paid on above stated services to the appellant.
The Counsel for the appellant submitted that insofar as Outdoor Catering Service and Rent-a-Cab Service are concerned and that the manufacturing unit is having large number of employees working in the factory and as per Factories Act, they were bound to provide food facilities and therefore, Outdoor Catering Service before 2011 amendment to the definition of input service was eligible for availment of CENVAT Credit.
The Counsel further contended that for Rent-a-Cab Service stating that the Rent-a-Cab Service was provided by the appellant for facilitating transportation of employees. In respect of services availed to provide food coupons the counsel submitted that food coupons are provided to employees to be utilized during lunch, dinner etc. and submitted that since the services are utilized by the employees, CENVAT Credit is admissible.
The High Court of Karnataka in the case of Commissioner of Central Excise Bangalore v. Bell Ceramics Ltd, held that services such as Outdoor Catering Service and Rent-A-Cab Service provided to the manpower working in a manufacturing unit were admissible as input services, in respect of Club Services he has submitted that the club membership was of the company and company was paying the membership fee and services of the club were utilize for the purpose of business and that the period was also before 2011.
A Single Bench of Anil G. Shakkarwar, Technical Member, observed that corporate membership of the club is utilized for business meetings and sales meetings, and therefore, for the period prior to April 1, 2011, service tax paid on corporate membership of the club was admissible for availment of CENVAT credit.
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