2012 (10) TMI 32 - AT - Service Tax

Cenvat credit input services - rule 2(l) - Service tax paid on watering of lawns, bougainvilleas, creepers, shrubberies and shadow trees, keeping them neat by regular planting and replanting and trimming and pruning etc. inside of appellant s factory premises. Credit taken by the appellant of the service tax paid on these services has been denied on the ground that the same is not covered by the definition of input service Held that - Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc. of the office premises - concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly, manner, certainly, the tax paid on such services would form part of the costs of the final products credit is allowed - in favour of the assessee

Summary

Issues:
1. Denial of credit for service tax paid on garden maintenance services.
2. Applicability of the definition of input services for claiming credit.
3. Comparison with a previous High Court decision regarding input services.

Analysis:
1. The appellant entered into an agreement with M/s. Green Door for services like watering lawns, trimming, and pruning inside the factory premises. The denial of service tax credit on these services was based on the argument that they did not fall under the definition of input service. Additionally, a penalty was imposed equal to the service tax credit claimed.

2. The counsel for the appellant cited a previous decision of the High Court related to input services. The High Court had emphasized that the definition of input services is broad and inclusive. It stated that activities related to business and services rendered in connection with it, including landscaping of factory or garden, would be part of input services. The Court highlighted the importance of maintaining factory premises for credit rating, compliance with environmental laws, and corporate social responsibility. Based on this reasoning, the Tribunal held that service tax paid for such services should be considered as input services, entitling the assessee to claim credit.

3. The Tribunal, in light of the High Court decision, concluded that the credit of service tax paid for garden maintenance should be allowed. The Tribunal set aside the impugned order and allowed the appeal, aligning with the view that such credit is admissible based on the broad definition of input services and the importance of maintaining factory premises for various reasons including compliance and corporate responsibility.

This detailed analysis of the judgment highlights the issues, arguments presented, relevant legal principles, and the final decision reached by the Tribunal, providing a comprehensive understanding of the case.