Order Date – 31st August 2023

Parties: M/s BMS Industries Ltd. Vs. Commissioner of CGST 

Facts – 

• The Appellant, M/s BMS Industries Ltd. is in the business of manufacturing excisable goods. They engaged M/s. Kenstar Transport to transport their employees during the period from April 2015 to December 2016.
• They discharged the service tax under reverse charge as recipient of bus transport service. They subsequently attempted to claim Cenvat credit for the service tax paid. However, the Department disagreed with this claim, asserting that the Cenvat credit had been wrongly availed. 
• A show cause notice was issued seeking the recovery of the disputed credit, along with interest and penalty. This dispute led to a series of legal appeals and proceedings.

Issue – 

• Whether the credit of service tax paid on 'Bus Transportation Charges,' treated as Rent-a-cab service, is admissible as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004? 

 Order – 

• The Tribunal observed that a perusal of the decision in the matter of Solar Industries India Ltd. vs. CCE, C & ST, Nagpur; 2022(60) GSTL 216 (Bom.) it clear that the same is similar to the facts involved herein and while taking into consideration the amended definition of Rule 2(l) ibid and in particular Rule 2(l)(B) ibid it has been held by the Hon’ble High Court that the transportation of employees for reaching factory is not an activity which could be said to be part of manufacturing activity and it is merely for personal convenience of employees to enable them to reach the premises of the factory so as to participate in the manufacturing activity which is not permitted to be treated as ‘input service’ after 1.4.2011 in view of the amended provisions.
• Hence it was held that the facility of transportation provided by the appellant to its employees for reaching factory cannot be treated as input service in view of amended definition of Rule 2(l) and in particular Rule 2(l)(B) ibid which specifically excludes services provided by way of renting of motor vehicle, insofar as they relate to a motor vehicle which is not a capital goods, from the definition of input service and its merely a personal service to its employees.
• Accordingly, the impugned order is upheld and the appeal filed by the appellant is dismissed.