Page 156 - GSTL_2nd July 2020 _Vol 38_Part 1

74 GST LAW TIMES [ Vol. 38
9. I have considered the arguments on both sides and perused the rec-
ords. What is relevant in this case is the nature of the services on which Cenvat
credit has been availed and the manner in which such services were used. As
held by the Larger Bench in the case of Wipro Ltd. (supra) and as is clear from the
provisions to Rule 2(l) read with clause (C) thereof, no Cenvat credit can be
availed on any input service if the same is used for personal consumption of the
employees. The appellant’s argument is that they are not providing these ser-
vices to their employees for personal consumption as their employees but are
selling these services to them. In other words, they are obtaining the input ser-
vices from the internet service provider, D2H operator etc., and are further sell-
ing these services to their employees for a consideration. Therefore, as far as the-
se services are concerned, the employees are their service recipients and they are
the service providers. They are not in an employer-employee relationship as far
as these services are concerned. For the services which they have rendered to
their employees, they have collected amounts along with Service Tax and paid
the same to the exchequer and reflected these amounts in their ST-3 returns. I
find strong force in the argument of the appellant as far as these services are con-
cerned. Merely because a person happens to be their employee he does not cease
to be a service recipient. If the employees were not a service recipient, no
amounts would have been recovered from them and no Service Tax would have
been paid on the same. Conversely, the appellant cannot get any exemption from
payment of Service Tax if he has rendered services, even if such services are
rendered to their own employees for a consideration. This issue has been exam-
ined and clarified in the draft circular which never came to be issued. Neverthe-
less, the fact remains that there are two kinds of relationships between appellant
and their employees. First, they have a relationship as an employer and employ-
ee. As far as this relationship is concerned, any input service which is availed to
provide benefits to their employees is excluded from Rule 2(l). Secondly, they
have a relationship as a service provider and a service recipient. As far as these
services rendered with respect to this equation are concerned, the appellant is
bound to pay Service Tax on the services rendered to their employees for a con-
sideration and is entitled to avail credit on input services on the relevant services.
I, therefore, find that the appellant is entitled to the Cenvat credit on the disputed
amounts.
10. As far as the second issue of credit being availed based on debit
notes is concerned, Learned Counsel has taken me through samples of the doc-
uments to demonstrate that credit was not taken on debit notes by them. Debit
notes were only raised by them on their employees to recover amounts. They
have not availed any Cenvat credit on the basis of such debit notes. In view of
the above, I find that the demand is not sustainable and the impugned order is
liable to be set aside and I do so.
11. The impugned order is set aside and the appeal is allowed with
consequential relief, if any.
(Order pronounced in open Court on 19-9-2019)

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GST LAW TIMES  2nd July 2020  156