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2017 (4) TMI 805 - AT - Service TaxCENVAT credit - Outdoor Catering Services - Manpower Supply for Garden Maintenance Services - Maintenance and Repair Service of Sewage Treatment Plant - Held that - the appellants had agreed to reverse the CENVAT Credit in so far as it pertains to the amount collected from the employees in respect of the Outdoor Catering Services - the credit for the period prior to 1.4.2011 is allowed to the extent, the incidence of such services is borne by the appellant not recovered from anybody else - so far as credit pertaining to period after 1.4.2011 is concerned, the appellants are entitled to take credit in so far as it relates to the burden of service borne by the appellant themselves and not recovered from any other party. Garden Maintenance Service - Maintenance of Sewage Treatment Plant - Held that - it is apparent that credit for the sewage treatment plant and for the garden maintenance cannot be denied as the same are statutory requirement for operating the Port. Interest - Held that - Interest was required to be paid on credit taken or utilized wrongly. Interest liability will accordingly be modified by original adjudicating authority as per the prevailing provisions of law. Penalty - Held that - it is a fit case for invocation of Section 80 of the Finance Act, 1994 and, therefore, penalty u/r 15 of the CCR, which in turn is penalty in terms of Section 76 or 78 of the FA, 1994, is set aside. Appeal allowed - decided partly in favor of appellant.
Issues:
- Denial of CENVAT Credit on Outdoor Catering Services - Denial of CENVAT Credit on Manpower Supply for Garden Maintenance Services - Denial of CENVAT Credit on Maintenance and Repair Service of Sewage Treatment Plant Analysis: Issue 1: Denial of CENVAT Credit on Outdoor Catering Services The appellant contended that Outdoor Catering Services were provided as per statutory provisions and not for personal consumption. They agreed to reverse the credit for amounts recovered from employees pre-1.4.2011. Relying on the Ultratech Cements Ltd. case, the Tribunal allowed credit for the period pre-1.4.2011 where the service burden was borne by the appellant. Post-1.4.2011, credit was allowed as the services were statutory requirements, following the Hindustan Coca Cola Beverages case. Issue 2: Denial of CENVAT Credit on Manpower Supply for Garden Maintenance Services The appellant argued that maintaining the garden was a statutory requirement under environmental regulations. They cited the Maharashtra Pollution & Control Board's conditions, emphasizing the necessity to operate the sewage treatment plant and use treated sewage for gardening. The Tribunal upheld the credit, stating that denial would conflict with statutory obligations. Issue 3: Denial of CENVAT Credit on Maintenance and Repair Service of Sewage Treatment Plant The appellant justified the credit by highlighting the agreement with JNPT and compliance with pollution control regulations. They demonstrated the linkage between garden maintenance and sewage treatment as mandated by the Maharashtra Pollution & Control Board. The Tribunal ruled in favor of allowing the credit, considering it a statutory obligation for operating the Port. The Tribunal set aside the demands except for amounts recovered from others in the case of Outdoor Catering Services. Regarding interest liability, the rules were analyzed, and adjustments were recommended by the original adjudicating authority. Invocation of Section 80 was approved due to the interpretational nature of the issue, leading to the setting aside of penalties under relevant sections of the Finance Act, 1994. Ultimately, the appeals were partly allowed based on the aforementioned terms.
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