Cenvat Credit of Canteen Services

Court :
Tribunal-Larger Bench

Brief :
Held by Larger Bench:- · It is well settled that every clause of the Statute should be construed with reference to the context in which it is issued. A bare mechanical interpretation of words and application of legislative intent is devoid of concept and purpose will reduce most of the remedial and beneficial legislations to futility. To be literal in meaning is to see the skin and miss the soul. · The legislature never wastes its words or says anything in vain and a construction which attributes redundancy to legislation will not be accepted, as has been observed by the Supreme Court in the case of Union of India vs. Hansoli Devi 2002 7 SCC 273. · A similar observation was made by the Apex Court in the case of Peerless Finance that the word “include” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. · The word “include” is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that is was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to “mean and include”, and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. · The context in which and the purpose for which the credit rules have been issued are clear from the press note dated August 12, 2004 issued by the Ministry of Finance, prior to introduction of the credit rules wherein the draft rules were circulated for inviting comments from trade and industry. This note clearly states that “In principle, credit of tax on those taxable services would be allowed that go to form a part of the assessable value on which excise duty is charged”. · Expenses towards the canteen and provision of subsidized canteen forms part of the cost of production as is evident from the Para 4.1, 5.2 of the CAS-4 which defines the phrase “Cost of production”, and under the head Direct Wages and Salaries, subsidized food has also been considered as part of direct wages and salaries, being fringe benefits.

Citation :
2008-TIOL-1634-CESTAT-MUM-LB IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO. E/1279/07-MUM & E/CO-239/07-MUM Date of Hearing : 04.09.2008 Date of Decision: 25.09.2008 CCE, MUMBAI –V Vs M/s GTC INDUSTRIES LTD