2011 (3) TMI 1050 - AT - Service Tax

Waiver of pre-deposit of Service Tax, interest and penalty - Service Tax paid by the assessee on Architect Services employed for construction of rain water harvesting system in its premises - Held that - As decided in Coca Cola India Pvt. Ltd.Vs. CCE, Pune - III 2009 (8) TMI 50 - BOMBAY HIGH COURT credit was available to an assessee where it had paid Service Tax on the activities related to its business - at there is no dispute that rain water harvesting system is set up with the object of raising the ground water level - Water is essential for the assessee to manufacture its final product - It appears that the Architect Service availed by the assessee is an admissible input service - Accordingly, grant waiver of pre-deposit of the dues adjudged against the assessee and stay recovery thereof pending decision in the appeal.

Summary

Issues:
1. Whether waiver of pre-deposit of Service Tax, interest, and penalty should be granted to the appellant.
2. Whether the activity of setting up a rainwater harvesting system exclusively benefited the assessee.

Analysis:
1. The appellant, engaged in the manufacture and clearance of aerated water, sought waiver of pre-deposit of Service Tax, interest, and penalty imposed by the Original Authority and sustained by the Commissioner (A). The appellant claimed that the impugned demand was related to credit of Service Tax paid for 'Architect Services' used in constructing a rainwater harvesting system to augment ground water, which is essential for the manufacturing activity. The appellant argued that the credit availed was legitimate and relied on various case laws to support the claim. The learned JDR opposed the application, stating that the rainwater harvesting system initiative did not exclusively benefit the assessee. However, the Tribunal, considering precedents like Coca Cola India Pvt. Ltd. case, held that the Architect Service availed by the assessee was an admissible input service. Consequently, the Tribunal granted waiver of pre-deposit and stayed recovery pending appeal decision.

2. The issue of whether the rainwater harvesting system exclusively benefited the assessee was raised during the proceedings. The learned JDR contended that the initiative aimed at conserving water resources in the region, benefiting the community rather than solely the assessee. However, the Tribunal found that the rainwater harvesting system, essential for raising the ground water level, directly impacted the manufacturing process of the assessee. Drawing from precedents like Ultratech Cement Ltd. case and Brakes India Ltd. case, the Tribunal concluded that the Architect Service used for setting up the system qualified as an admissible input service. Therefore, the Tribunal granted waiver of pre-deposit based on the close nexus between the service availed and the manufacturing activity of the assessee.

This judgment highlights the importance of establishing a direct link between the service availed and the core business activity to determine the eligibility for credit and waiver of pre-deposit in Service Tax matters. The decision emphasizes the significance of precedents and case laws in supporting legal arguments and justifying claims related to tax liabilities and input services.