Cenvat Credit Admissible on Service Tax Paid on "Manpower Supply Service”, Qualify as Input Service: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad, has held that Cenvat credit is admissible on service tax paid towards manpower supply services such as labour supply, recruitment agency, and housekeeping.

The Tribunal ruled that these services, being directly connected with the overall manufacturing process and essential factory operations, qualify as "input services" under Rule 2(l) of the Cenvat Credit Rules, 2004.

Multiple demands were raised on Solvay Specialities India Pvt. Ltd. for the period between 2014 and 2017, wherein the department contended that manpower supply services did not fall within the ambit of input services and disallowed credit amounting to several crores.

The adjudicating authority confirmed the demands, and the Commissioner (Appeals) upheld the denial of credit, observing that the assessee failed to produce adequate documentary evidence to prove that such manpower services were directly used in manufacturing activities.

On appeal, the Bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) noted that the issue was already covered in favour of the appellant in earlier decisions, including in the assessee’s own case decided by the same Tribunal in 2018.

It was reiterated that manpower recruitment and supply services are specifically included in the definition of "input service." Even if not directly linked to manufacture, their inclusion under the “recruitment service” clause makes the credit admissible.

The Tribunal also stated the decision in CCE v. Carboline (India) Pvt. Ltd., which recognized that manpower supply and insurance services form part of the cost of manufactured products and are thus eligible for credit.

Accordingly, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief.

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