2010 (6) TMI 364 - AT - Service Tax

Credit of service tax paid on input services - activities in relation to business can cover all activities related to functioning of a business and the expression business is of wide import - definition of input services is quite wide and an activity used for business purposes is required to be held as input service - assessee entitled to the benefit of credit of service tax paid - Appeal is allowed

Summary

Issues: Denial of credit for service tax paid on vehicles in residential colony and insurance of residential building.

In this judgment by the Appellate Tribunal CESTAT, Ahmedabad, the issue revolved around the denial of credit for service tax paid on vehicles used in the residential colony and insurance of the residential building. The adjudicating authority had denied the credit, citing that these services could not be considered "input services." The Commissioner relied on a Supreme Court decision in a previous case. However, the advocate contended that the issue at hand pertained to service tax paid on services used in business activities, not on inputs for manufacturing. The Tribunal referenced the definition of "input services" in the Cenvat Credit Rules, 2004, and previous judgments to establish that services like garden maintenance should be considered as input services for credit availment. The Tribunal emphasized that the term "business" in the rules encompassed a wide range of activities beyond just manufacturing.

Furthermore, the Tribunal cited precedents like the case of Manikgarh Cement and Millipore India Ltd., where services like repair and maintenance for residential colonies and insurance policies were deemed eligible for credit as modvatable input services. Other decisions, such as those in the cases of Endurance Systems India Pvt. Ltd. and Sundaram Clayton Ltd., supported the notion that activities used for business purposes should be recognized as input services, entitling the assessee to the credit of service tax paid. Consequently, the Tribunal set aside the orders that denied the credit, allowing the appeals and granting consequential relief to the appellants. The stay petition was also disposed of in favor of the appellants.