2013 (12) TMI 1635 - AT - Service Tax

Summary

Issues involved: Assessment of tax liability u/s two show cause notices, denial of Cenvat credit for construction of quarters and hospital charges, interpretation of 'input services' u/s Cenvat Credit Rules, 2004, conflicting judgments on similar cases.

Assessment of Tax Liability:
The assessed tax liability presently due, after appropriations ordered, amounts to Rs. 81,53,013, covered by a common adjudication order passed in respect of two show cause notices. The order specifies interest and penalty as well.

Denial of Cenvat Credit:
The demand arises from the denial of Cenvat credit claimed under the Cenvat Credit Rules, 2004, for the construction of quarters for housing personnel and hospital charges for medical facilities. The adjudicating authority denied input credit on the grounds that these services fall outside the ambit of 'input services' as defined in Rule 2(1) of the 2004 Rules.

Interpretation of 'Input Services':
The Tribunal is of the view that the deployment of security personnel for factory/plant security and providing medical facilities to the petitioner's employees falls within the scope of 'input services' as defined in Rule 2(1) of the 2004 Rules. This includes services used in or in relation to the manufacture or production of a final product or an output service.

Conflicting Judgments:
There is a conflict of opinion regarding the application of Rule 2(1) of the 2004 Rules in different factual scenarios. While some judgments upheld denial of Cenvat credit for services related to residential colonies, others, like the Karnataka High Court, held various services like canteen, transportation, insurance, and health insurance for employees to be 'input services'. The Tribunal notes that there is no conflict in the interpretation of Rule 2(1) itself.

Conclusion:
Given the strong prima facie case in favor of the petitioner, the Tribunal waives the pre-deposit requirement and stays further proceedings for the realization of the assessed liability pending the disposal of the appeals. Stay applications are accordingly disposed of.