Punjab & Haryana High Court Allows CENVAT Credit To Maruti Suzuki On Training And Coaching Service, IT (Software) Services

The Punjab and Haryana High Court has allowed the cenvat credit to Maruti Suzuki on training and coaching services, IT (software) services (CHA), cargo handling services for export, warehouse and storage services, land survey services, and hotel Broadway services.

The bench of Justice G.S. Sandhawalia and Justice Harpreet Kaur Jeewan has observed that the service is required as it is not only used in relation to manufacturing but also regarding advertisement, sales promotion and storage, place of removal, including recruitment, quality control coaching and training, and computer network. The transportation of inputs or capital goods and outward transportation up to the place of removal are, thus, provided under Section 2(l).

A show cause notice was issued to the respondent-assessee as to whether the credit taken in 2008-09 for the services in which the Tribunal has recorded the findings has neither been used in relation to manufacturing the goods nor for clearance of goods. Thus, on account of the same being used for providing taxable input services and not being covered under the definition of input service under Rule 2(l), the amount of Rs. 12,68,80,303 from the period July 2006 to 2010-11 was sought to be disallowed and recoverable under Rule 14 of the Rules, along with interest and penalties to be levied under Rule 25.

The Commissioner came to the conclusion that the notice was providing the service of manpower recruitment and supply agency to ONGC and, therefore, service tax was payable by examining the sample copy of the invoice of the ONGC. The drivers had been provided by M/s. G4S, and they had also raised invoices. Therefore, it was held that it was admissible service to claim input service for the provision of output service for manpower recruitment and supply services, and the admissibility was allowed.

Similarly, the services provided under Mundra and JNPT Port were also held to be the entitlement by placing reliance upon Rule 2(l) that it would be applicable to the manufacturer of final products and clearance of final products from the place of removal w.e.f. 01.04.2008 to clarify as admissible input service.

The loading ports, JNPT Port and Mundra Port, from which the goods were being handed over to shipping lines, were held to be the places of removal. The recovery of Cenvat credit of Rs. 98,34,077/- was directed primarily on the ground that the deputed personnel working at premises taken on rent, the premises known as the Japanese Hostel Cum Restaurant Complex, were for the accommodation of the Japanese personnel.

The housekeeping facility was being provided by M/s. Jukaso IT Suites, and the catering of Japanese food was also being carried out. Resultantly, it was held that the services were more of a personal consumption and staff welfare nature, and the Cenvat credit had been disallowed.

The department contended that the Tribunal was not correct in coming to this conclusion by allowing the appeal of the assessee and dismissing that of the department.

The assessee contended that the assessee is one of the biggest car manufacturers in India and, in collaboration with its Japanese parent company, is engaged in the distribution, sale, and supply of the vehicles. It has a huge dealer network all over the country and is also exporting vehicles, and the services rendered would qualify for the input service being used by the provider of taxable services.

“We are of the considered opinion that the Cenvat Credit has been rightly granted to a large extent by the Commissioner, and the benefit that had been declined has been rightly allowed by the Tribunal by modifying the order of the Commissioner,” the court said.

Counsel For Appellant: Sourabh Goel

Counsel For Respondent: Amrinder Singh

Case Title: Commissioner of Central Excise, Delhi-III Versus Maruti Suzuki India Ltd.

Case No.: CEA-18-2022

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