Tribunal Upholds Eligibility for Majority of Input Services; Bars Credit on Certain Exclusions
In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai Regional Bench delivered a judgment on December 19, 2025, partially favoring Capgemini Technology Services India Limited in its appeal against the Principal Commissioner of CGST & Central Excise, Mumbai East Commissionerate. The appeal challenged the disallowance of CENVAT credit claims related to various input services availed during 2015-2017.
The Tribunal, presided over by Mr. M.M. Parthiban, Member (Technical), scrutinized the eligibility of various input services under Rule 2(l) of the CENVAT Credit Rules, 2004. The judgment examined whether services utilized by Capgemini qualified as 'input services' for CENVAT credit, excluding those specified under the exclusion clause.
Capgemini's appeal stemmed from a common Order-in-Original dated April 29, 2022, which disallowed CENVAT credit amounting to Rs. 19,53,266 and allowed credit of Rs. 33,37,70,873 against a total demand of Rs. 33,57,24,139. The dispute focused on the interpretation of 'input service' and its application to services such as construction for repair and maintenance, health club and fitness center services, and restaurant services linked to specific projects.
The Tribunal upheld Capgemini’s claim for CENVAT credit on services qualifying under the 'means' or 'inclusive' parts of Rule 2(l), provided they did not fall under the 'exclusion' category. It recognized the eligibility of services like construction for repair and maintenance within office premises, health club services used for employee wellness, and restaurant services connected to specific projects.
However, the Tribunal affirmed the disallowance of credits on services explicitly excluded under Rule 2(l), including rent-a-cab services, outdoor catering, and general maintenance unrelated to output services. The Tribunal also noted the inconsistency in the department’s approach, emphasizing the principle of consistency based on precedents and earlier orders.
Furthermore, the Tribunal observed that the department's demand for CENVAT credit relating to the period 2015-2016 was time-barred, as the Show Cause Notice was issued in 2018 without grounds for invoking the extended period of limitation.
The judgment is seen as a partial victory for Capgemini, allowing credits on Rs. 15,14,084 worth of services while upholding the disallowance of Rs. 4,39,177 worth of ineligible services. The Tribunal set aside the impugned order to the extent of confirmed adjudged demands proposed in the SCNs, providing clarity on the interpretation of input service eligibility under the CENVAT Credit Rules.
This ruling sets a precedent for similar cases, highlighting the importance of determining the eligibility of input services based on their usage in providing output services and adhering to legal definitions and exclusions.
Bottom Line:
Eligibility of CENVAT credit under Rule 2(l) of the CENVAT Credit Rules, 2004 was examined. The Tribunal ruled that services qualifying under the 'means' or 'inclusive' part of the definition, and not falling under the 'exclusion' category, are eligible for CENVAT credit.
Statutory provision(s): Rule 2(l) of the CENVAT Credit Rules, 2004
