Page 155 - GSTL_2nd July 2020 _Vol 38_Part 1

2020 ] ULTRA TECH CEMENT LTD. v. COMMISSIONER OF C.T., TIRUPATI 73
notes on their employees for the value of services rendered to them along with
Service Tax. These debit notes are not the input service documents on which they
have availed Cenvat credit.
6. He would draw the attention of the Bench to the draft C.B.E. & C.
Circular F. No. 354/127/2012-TRU, dated 27-7-2012. The relevant portion is as
follows :
“D. Treatment of supplies made by the employer to employees
8. A number of activities are carried out by the employers for the employ-
ees for a consideration. Such activities fall within the definition of ‘service’
and are liable to be taxed unless specified in the Negative List or otherwise
exempted.
9. One of the ingredients for the taxation is that such activity should be provided
for consideration. Where the employees pay for such services or where the amount
is deducted from the salary, there does not seem to be any doubt. However, in cer-
tain situations, such services may be provided against a portion of the salary fore-
gone by the employee. Such activities will also be considered as having been made
for a consideration and thus liable to tax.
Cenvat credit for inputs and input services used to provide such services will be el-
igible under extant rules. The said goods or services would now not be construed to
be for personal use or consumption of an employee per se and rather shall be a con-
stituent to the taxable service provided to an employee. The status of the employee
would be as a service recipient rather than as a mere employee when consuming
such output service. The valuation of the service so provided by the employer
to the employee shall be determined as per the extant rules in this regard.”
7. He would submit that they have relied on this draft circular before
the original authority as well as the first appellate authority, both of whom have
rejected it on the ground that it was only a draft circular which was never finally
issued and hence is not binding on the department. He would submit that never-
theless, as far as the input services in dispute are concerned, the appellant re-
ceived them to provide services to their own employees who were the service
recipients. Therefore, they are eligible for the Cenvat credit. Accordingly, he
prays that the entire demand may be set aside and their appeal may be allowed
with consequential relief.
8. Learned Departmental representative reiterates the findings of the
lower authority and asserts that the definition of input services under Rule 2(l) of
CCR, 2004 specifically excludes services meant for personal use or consumption
of the employees. In this case, it is not in dispute that the personal use by the
employees was in their residential quarters and not in connection with their offi-
cial work. The mere fact that the appellant has also recovered some amounts to-
wards these services from their employees and paid Service Tax on such
amounts does not change the fact that the services were provided for the person-
al use of their employees. Therefore, there is no force in the argument of the ap-
pellant. As far as the draft circular is concerned, he would submit that it was only
a draft circular which has never been issued and therefore, it is not binding on
the department. He further relies on the judgment of the Larger Bench of the Tri-
bunal in the case of Wipro Ltd. [2018 (363) E.L.T. 1111 (Tri. - LB)] to assert that
services meant mainly for personal consumption of employees cannot be taken
as input services.
GST LAW TIMES  2nd July 2020  155