Supreme Court denies ITC for availing Outdoor Catering Services to Employees

In a setback to Toyota Kirloskar Motor Pvt Ltd, the Supreme Court denied the Input Tax Credit (ITC) for availing outdoor catering services to employees. For providing food and beverages the appellant, Toyota Kirloskar Motor Pvt Ltd engaged the services of outdoor catering viz., Sodexho Food Solutions Private Limited to render taxable services of outdoor catering to the appellant by supplying services inside the canteen facility and raised bills/invoices by charging applicable rate of service tax. The service being an eligible ‘input service’ for the manufacturing, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004, the appellant is availing the cenvat credit of the same and utilized the said credit towards duty payable on the final products manufactured by the appellant. The appellant has taken cenvat credit of service tax paid under the category of ‘outdoor catering’ service since September 2004 till April 2011 i.e., till the amendment was made to Cenvat Credit Rules, 2004.

Source Taxscan