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Cenvat credit and physical fitness of employees

16 January, 2014

The  CESTAT in a recent case has held that service of gym instructor is  essential for the physical fitness of  employees and being necessary inputs, Cenvat credit of Service Tax would be admissible on such service.

Reasoning that the benefit of Cenvat credit is concomitant with liability to service tax the tribunal also held that registration is not essential to avail credit of service tax on input service. The department advanced a view that the assessee could not utilise Cenvat credit on services used/paid for prior to registration under the relevant category.

Further, the Tribunal held that for the assessee engaged in Information Technology Software Service, AMC of air-conditioners was an input service directly required for providing output service and there was no need to consider the phrase ‘activities relating to business’ as it existed during relevant period. Relying on precedent ruling, credit on renting service for canteen area was also allowed. [Commissioner v. Verizon Data Services India P. Ltd. – CESTAT, Chennai, Order dated 11-12-2013]
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