ONE of the path breaking changes brought in by Notification No. 3/2011 dated 1.3.2011, w.e.f 1.4.2011 is the new definition of ‘Input service' under Rule 2 (l) of the Cenvat Credit Rules, 2004 (hereinafter, ‘Rules') substituting the earlier definition. Amongst the significant aspects under the new definition are the absence of expressions such as ‘ setting up' , ‘ activities relating to business ' and the freshly introduced exclusion clause. These special features under the new definition are an attempt of the legislature to exclude a number of services from the definition. The most interesting part about the exclusion clause is that it specifically aims at excluding those input services which are clearly decided by various judicial forums to be qualifying as input services under the earlier definition. Let us have a brief musing on these features of the new definition of input service.
As per the means clause of the definition of input service (as it stands w.e.f 1.4.2011), ‘ input service means any service (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal ' as restricted by the exclusion clause at (A), (B) and (C). The exclusion clause at clause (C) excludes services “ used primarily for personal use or consumption of any employee” and provides certain illustrative services.
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