2008 (11) TMI 97 - AT - Service Tax

Availment of input Service Tax credit on Medical and personal accident policy Group personal accident policy Insurance Personal accident policy Personal vehicle services Landscaping of factory garden. Catering bills - these services have been rendered only in relation to the manufacture of the final products - by virtue of the definition of input service even modernization renovation repair etc. of the office premises are included - appellants are entitled to credit

Summary

Issues:
1. Availment of input Service Tax credit on various services including medical and personal accident policy, insurance, personal vehicle services, landscaping of factory garden, catering bills.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore addressed the issue of availment of input Service Tax credit on multiple services. The Chartered Accountant for the Appellant argued that various services such as contribution to provident fund, ESIC, medical benefits, subsidized food, and other allowances are considered for costing a final product as per CAS-4 standards. It was contended that these services are related to the manufacture of final products, making the input credit allowable. The Tribunal agreed with this argument, emphasizing that CAS-4 includes services like medical benefits and subsidized food in the cost of final products. Therefore, the input credit on these services was deemed allowable.

Regarding the credit on Service Tax paid for landscaping, the Chartered Accountant referred to the definition of "Input Service," which includes services used in relation to setting up, modernization, renovation, or repairs of a factory premises. The argument was made that even for activities like landscaping, the credit is allowable. The departmental representative contended that these services are remotely connected to the manufacture of final products and supported the Commissioner (A)'s decision to disallow credit on such services. However, the Tribunal, after careful consideration, held that the definition of 'input service' is broad and includes services related to the manufacture of final products. Therefore, even landscaping of the factory premises can be considered an 'input service.' The Tribunal emphasized the importance of maintaining the factory environment and concluded that the appellants are entitled to credit on the services in question, allowing the appeal with consequential relief.

In conclusion, the judgment clarified that services like medical benefits, subsidized food, and even landscaping of factory premises can be considered 'input services' related to the manufacture of final products, making the input credit allowable. The decision highlighted the broad scope of the definition of 'input service' and the importance of considering various services in the costing of final products as per CAS-4 standards.