1. The issue involved in all these appeals being the same, they are heard together and disposed by this common order.
2. Brief facts are that the appellants are registered with the service tax department and rendering 'Commercial Training or Coaching Centre Service'. During the course of audit, it was noticed that they had availed cenvat credit of service tax paid on certain input services namely outdoor catering service, restaurant service and short term accommodation service, which according to the department was not eligible for credit.
3. Show cause notice was issued proposing to disallow the credit and to recover the same alongwith interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. In appeal, the Commissioner (Appeals) reduced the penalty to 10% of service tax, but however upheld the demand of interest. Aggrieved, the appellants are now before the tribunal.
4. On behalf of the appellant, the Ld.Consultant, Sh.G.Shivakumar submitted that the appellant is providing commercial training and coaching centre services in various places in India and provides the following to the candidates who attend the course :
a. Coaching on Welding Inspection
b. Books and other materials for the course
c. Welding items for testing
d. Food and refreshment during the day
The appellant collects from the candidates the consolidated amount as fees for the aforesaid activities. The said fees includes the charges for food and refreshments given to the candidates during the period of attending the course. The authorities below have erred in disallowing the credit on outdoor catering services. The Exclusion Clause in the definition of 'input service‟excluded outdoor catering services provided to the employees when these are used primarily for personal consumption. In the present case, the outdoor catering services were used for providing food not for employees of appellant, but for the candidates who attended the course. It is part of the fees collected from the candidates. Apart from students only a few instructors who impart the training would be availing the facility of food. Major part of the outdoor catering services are availed for the purpose of giving food and refreshments to the candidates who attend the course. The appellant conducts the said course in five star hotels. They pay rent for the hall used for conducting the course. Food and refreshments are also provided to the candidates as well as the instructors in these hotels during the course period. As the outdoor catering services are not provided to employees and as these are not for personal consumption of employees, the services would not fall within the exclusion clause of the definition. He referred to the Larger Bench decision of the Tribunal in the case of M/s.Wipro Ltd. Vs The CCE Bangalore-III reported in 2018 (4) TMI 149 – CESTAT Bangalore and argued that the said decision is not applicable to the present case, as the food in the present case is consumed by the candidates and not by the employees. Only when the food is given to the employees, it would fall within the exclusion clause. The Ld.Consultant put forward alternative argument stating that it has to be considered that the appellant is providing a bouquet of services of coaching, food and other incidental activities. Assuming that the appellant had raised separate bills for coaching and food charges, then the appellant would be eligible for credit on the food charges also, as the appellant has received food services for providing coaching services. Effective service tax rates for food is merely 6% after abatement. Instead the appellant has consolidated both the food and the coaching amount as a single consolidated amount and has paid such service tax of consolidated amount @ 15%. That if the credit would be available to the appellant if billed separately, then the credit should be eligible if shown as a consolidated bill also. He also prayed to set aside the penalties imposed.
5. In regard to short term accommodation services, he furnished the documents like attendance sheet and submitted that the instructors have to be given accommodation in these hotels, because the courses were imparted in these hotels. Therefore the short term accommodation services are availed for giving accommodation to the instructors and eligible for credit.
6. The Ld.AR, Sh.B.Balamurugan supported the findings in the impugned order. He relied upon the decision of the Larger Bench in the case of Wipro and argued that the issue is settled by the Larger Bench.
7. Heard both sides.
8. The question that arises for consideration is whether the appellant is eligible for Cenvat credit on food / restaurant services / outdoor catering services and short term accommodation services. The Ld.Consultant has been at pains to argue that food is provided to the candidates who attend the coaching and not for the employees and therefore would not fall under the exclusion clause of definition of input services. For better appreciation, the relevant portion of definition of input service after 1/4/2011 is reproduced as under :-
Rule 2 (1) 'Input Service' means any service,
(i) used by a provider of output service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes ......
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
9. The Larger Bench of the Tribunal in the case of Wipro (supra) has settled the issue and observed that the credit is not eligible for outdoor catering services after 1/4/2011. The argument of the Ld.Consultant is that the exclusion clause as well as the Larger Bench decision would not apply, as they provide food to the candidates and not to the employees. The argument of the Ld.Counsel is neither tenable or acceptable. The Larger Bench has categorically held that the outdoor catering services is not eligible for credit after 1/4/2011. Suppose the manufacturer is conducting a welding course within the factory premises and students who are not employees attend the course, the outdoor catering services provided to such students would not be eligible for credit as per the decision of the Larger Bench. I therefore hold that appellant is not eligible for credit on outdoor catering services. However, since the issue has travelled to the Larger Bench and there were divergent views prior to that, I am
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of the view that the penalty on this count requires to be set aside which I hereby do. 10. The other issue is regarding short term accommodation service availed by the appellant for giving accommodation to instructors. From the documents, it is seen that the accommodation was provided only to instructors who were imparting the coaching services. These are directly used for providing output services. I hold that the appellant is eligible for credit on short term accommodation services. From the above discussions, I hold that the impugned order is modified to the extent of upholding the demand on outdoor catering services, but however setting aside the penalty on such services. The credit in respect of short term accommodation services is allowed. The appeal is partly allowed in above terms, with consequential reliefs, if any.