Setback for HCL Technologies: CESTAT Denies CENVAT Credit Refund on Gym, Yoga, Laundry, and Guest House Services [Read Order]
CESTAT denied HCL Technologies a CENVAT credit refund on GYM, yoga, laundry, and guest house services, ruling they were for personal use and not business-related.
![Setback for HCL Technologies: CESTAT Denies CENVAT Credit Refund on Gym, Yoga, Laundry, and Guest House Services [Read Order]](https://images.taxscan.in/h-upload/2025/07/21/2067048-hcl-technologies-taxscan.webp "Setback for HCL Technologies: CESTAT Denies CENVAT Credit Refund on Gym, Yoga, Laundry, and Guest House Services [Read Order]")
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that HCL Technologies Limited is not entitled to a CENVAT credit refund for services such as GYM facilities, yoga workshops, laundry, and guest house maintenance, as these are primarily for personal use and not linked to the provision of taxable output services. HCL Technologies, an exporter of...
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that HCL Technologies Limited is not entitled to a CENVAT credit refund for services such as GYM facilities, yoga workshops, laundry, and guest house maintenance, as these are primarily for personal use and not linked to the provision of taxable output services.
HCL Technologies, an exporter of IT and business support services, had filed refund claims under Rule 5 of the CENVAT Credit Rules, 2004 for the quarters October to December 2015 and January to March 2016.
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The claims included credit availed on various input services, including those used for employee welfare and facility maintenance. The adjudicating authority partially rejected the claims, specifically disallowing credit on services such as GYM equipment, yoga workshops, laundry, and guest house charges, considering them unrelated to business operations.
Challenging the denial, the appellant’s counsel argued that these services were part of overall employee welfare and office infrastructure that supported business efficiency. They argued that the denial of credit without following the procedure under Rule 14 of the CENVAT Credit Rules was not justified and relied on earlier Tribunal decisions allowing such credits.
The revenue counsel argued that under the CBEC Circular dated 19.01.2010, services used for personal benefit such as fitness, recreation, or accommodation were excluded from the definition of eligible input services. The counsel argued that the nature of these services had no direct connection with the output services provided by HCL and thus could not be considered for refund.
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The two-member bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) observed that input services must have a direct or proximate nexus with the output service to qualify for CENVAT credit.
The tribunal found that services like GYM use, yoga sessions, laundry, and guest house arrangements were primarily for employee comfort and personal benefit, and not necessary for providing export services. The tribunal held that credit for such services was inadmissible as these did not contribute directly to service delivery.
The tribunal upheld the denial of refund on these specific services, ruling that CENVAT credit is not available for activities considered personal, even if they are part of a broader workplace environment. The appeal was partly allowed, with this portion of the claim rejected.
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