CENVAT Credit On Rent-a-Cab Catering Photography Cannot Be Denied For Lack Of Nexus: CESTAT Bangalore

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 20 August held that CENVAT credit cannot be denied on Rent-a-Cab, Outdoor Catering, Event Management, Cleaning and Photography services merely because they have no nexus with the output services.

A Bench comprising Technical Member R. Bhagya Devi partly allowed the appeal filed by Texas Instruments (India) Pvt. Ltd., holding that credit on these services was allowable, while remanding other issues for verification. She held:

“However, I find that the services such as Rent-a-Cab Service, Outdoor Catering Service, Event Management Service, Cleaning Service and Photography Service, this Tribunal in number of cases has been holding that credit cannot be denied on the ground of nexus with the output services and in appellant's own case vide Final Order No.20231-20238/2022 dated 12.05.2022, cenvat credit has been allowed on such services; hence, the question of denying the credit on this ground is not sustainable, the same is allowed.”

Texas Instruments (India) Pvt. Ltd., a wholly owned subsidiary of Texas Instruments Inc., USA, is engaged in semiconductor design and development of software used with semiconductor devices. It had availed CENVAT credit on various input services.

The Department denied the credit on the ground that certain services had no nexus with the output services. It also disputed credit claimed on invalid documents and credit for which invoices and other supporting documents had not been produced.

Texas Instruments submitted that credit on services including Event Management and Photography had already been allowed by the Tribunal in its own case. It further argued that credit could not be denied merely based on the description of services in the invoices when service tax had been paid on the input services.

The Tribunal accepted the company's contention regarding Rent-a-Cab, Outdoor Catering, Event Management, Cleaning and Photography services, noting that it had already allowed credit on such services in the company's own case.

As regards the other disputed services, Texas Instruments had submitted that these had been received from various agencies as Business Support Services and used for providing its output services. The Bench, however, noted that sufficient explanation had not been placed before the lower authority and remanded the issue for verification.

It directed the authority to allow credit if the services were eligible input services on which service tax had been paid. It also remanded the issue concerning credit denied for non-production of invoices and other supporting documents, directing the authority to verify the documents and extend credit if Texas Instruments was otherwise eligible.

Accordingly, the CESTAT partly allowed the appeal by way of remand.

Appearances: Ms. Meghna Lal and Ms. Vani Dwevedi, Advocates for the Appellant; Shri Maneesh Akhoury, Assistant Commissioner (Authorised Representative) for the Respondent.