2016 (1) TMI 1481 - HC - Service Tax

CENVAT Credit - input services - construction services used in constructions of dormitory - no co-relation between such input services and manufacture/clearance of finished goods as these services are more closely associated to welfare activity - HELD THAT - The appeal is admitted on substantial question of law.

Summary

Issues:
1. Allowance of Cenvat credit for construction services used in the construction of a dormitory.
2. Appeal against the order-in-appeal filed by a specific company.
3. Disallowance of Cenvat Credit taken and utilized by a specific company on the construction of a dormitory.

Issue 1: Allowance of Cenvat credit for construction services used in the construction of a dormitory:
The appellant's counsel referred to judgments of the Bombay High Court and argued that the dormitory's construction for workers did not qualify as input services related to the manufacturing process. The counsel highlighted that the Bombay High Court's decision in a similar case was under appeal at the Apex Court. The substantial question of law raised was whether the CESTAT was correct in allowing Cenvat credit for construction services used in building the dormitory, despite the lack of a direct correlation with the manufacturing or clearance of finished goods. The argument presented was that these services were more aligned with welfare activities rather than production processes.

Issue 2: Appeal against the order-in-appeal filed by a specific company:
The appeal in question was against the order-in-appeal no. 208/CE/APPL/ALLD/2011, dated 7-10-2011, filed by M/s. Bajaj Hindustan Limited, Unit Kundarki, Gonda, U.P. The Hon'ble CESTAT had to determine whether they were correct in allowing the respondent's appeal against the mentioned order-in-appeal. This issue required a thorough examination of the facts and legal arguments presented before the appellate authority.

Issue 3: Disallowance of Cenvat Credit taken and utilized by a specific company on the construction of a dormitory:
The adjudicating authority had disallowed Cenvat Credit of Rs. 27,77,221/- taken and utilized by M/s. Bajaj Hindustan Limited, Unit Kundarki, Gonda, U.P. for the construction of a dormitory. The question arose as to whether this disallowance was justified, considering the specific circumstances and legal provisions governing the eligibility of such credits. The scrutiny of the utilization of the credit amount and its alignment with the applicable laws and regulations was crucial in determining the validity of the disallowance.

This detailed analysis of the judgment from the Allahabad High Court provides insights into the legal complexities surrounding the allowance and disallowance of Cenvat credit for construction services related to a dormitory, the specific appeal filed by a company, and the disallowance of Cenvat Credit by the adjudicating authority.