Tax on taxi is input credit
THE service tax tribunal has held that service tax paid on rent-a-cab services availed by the employees working in a factory is eligible as input credit.
In this case, the assessee had availed Cenvat credit of service tax paid on rent-a-cab services.
The department denied the credit on the ground that such services were not in relation to manufacture of finished products, whether directly or indirectly.
The assessee contended that the definition of input service under the Cenvat Credit Rules is wide and the inclusive part of the definition covers services used in relation to the business. It was contended that the expression 'activities relating to business' in the rules is followed by the words 'such as' which is illustrative and not exhaustive. These words/activities refer to the ones which are required for the purpose of or in the interest of running the business and/or improving it, whether under any statutory obligation or otherwise.
The department however contested the above on the basis that the input service must have some relation with the manufacturing activity and services for providing conveyance to the employees is not in anyway a production or clearance related activity or service.
The Tribunal accepting the assessee's contentions held that the input services besides being used in or in relation to the manufacture of final products and clearances of final products from the place of removal includes a plethora of other services and therefore its scope is much larger than being used directly or indirectly in relation to manufacture.
It was held since rent-a-cab service is used for bringing employees to work in the factory for manufacture of goods, it has to be considered as being used indirectly in relation to the manufacture or as part of business activity for promoting the business.
When courier service becomes an export
THE Tribunal has held that delivery of articles and documents outside India by a courier agency in India shall qualify as export of services, since such international courier service was partly performed in India and partly outside India.
In this case, the assessee was engaged in providing international courier services and did not charge service tax on the basis that the services qualified as exports not subject to service tax.
It was contended by the assessee that under the Export of Service Rules, 2005, courier services, if performed partly in India and partly outside, qualified as exports and consequently the assessee did not charge service tax on provision of such international courier services.
The Department however contended that transport and delivery of articles and documents abroad could not be held to be service partly rendered in India and partly abroad and on that basis rejected assessee's contentions.
The Tribunal, accepting assessee's contentions, held that the assessee was not liable to pay service tax on the international courier service, part of which, in each transaction, was performed in India and the rest outside India.
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