Tribunal allows CENVAT credit on Outdoor Catering Services for employees (to the extent cost is borne by the Company) post the April 2011 amendment of the definition of ‘input services’

We are pleased to present a Tax Alert on the recent decision of the Mumbai Tribunal in the case of Hindustan Coca Cola Beverages Pvt Ltd v. CCE; 2014-TIOL-2460-CESTAT-Mum. The Tribunal allowed the appeal filed by the assessee holding that CENVAT credit is available in respect of Service tax paid on Outdoor Catering Services procured in relation to its employees. The present ruling is significant in light of the fact that it has been
pronounced post the amendment in the definition of ‘input services’ which excludes services primarily for personal use or consumption of any employee.

Placing reliance on this ruling, it should be possible to claim CENVAT credit in respect of all the services which are not primarily meant for personal use or consumption of employee.In other words, if the assessee could prove that primary intention of procurement of the service is to facilitate taxable output activity and the element of personal use is only incidental, there should not be any difficulty in claiming CENVAT credit for the same. What is the element of personal use or consumption would be a matter of fact and could vary from case to case.