2017 (4) TMI 1231 - HC - Service Tax

CENVAT credit - Gardening service used within their factory - Gardening service was received and used in compliance with the regulation enforced by Pollution Control authorities - Held that - the issue is decided in favor of assessee in the case of Commissioner of Central Excise and Service Tax Versus M/s. Rane TRW Steering Systems Ltd. 2015 (4) TMI 704 - MADRAS HIGH COURT , where it was held that where an employer spends money to maintain their factory premises in an eco-friendly manner, the tax paid on such services would form part of the cost of the final products and the same would fall within the ambit of input services and, therefore, the assessee is entitled to claim the benefit - credit allowed - decided in favor of appellant.

Summary

Issues:
Challenge to final order of Customs, Excise and Service Tax Appellate Tribunal regarding eligibility for Cenvat Credit on service tax paid on gardening services used within factory premises.

Analysis:
The appeal was filed challenging the final order of the Tribunal dated 26.04.2011. The main question of law framed for consideration was whether the appellants were entitled to Cenvat Credit for Service Tax paid on gardening service used within their factory premises. The Tribunal had partly allowed the appeal of the Revenue and dismissed the cross objections filed by the Assessee. The issue revolved around the eligibility of the Assessee, a manufacturer of vehicle parts, to avail of cenvat credit on service tax paid for gardening services utilized in its factory premises.

The Tribunal concluded that the Assessee failed to establish a connection between the gardening services and its business activity of manufacturing motor vehicle parts. Consequently, the Tribunal held that gardening service was not an eligible service for cenvat credit purposes. However, a judgment by the Division Bench of the same Court in a similar matter favored the Assessee, establishing a precedent in favor of the Assessee's position.

In light of the precedent set by the Division Bench judgment, the Court ruled in favor of the Assessee, allowing the appeal and setting aside the Tribunal's order dated 26.04.2011. The Court held that the Assessee was indeed eligible for Cenvat Credit on the service tax paid for gardening services used within its factory premises. No costs were awarded in this matter.

In conclusion, the judgment clarified the eligibility of the Assessee to claim Cenvat Credit on service tax paid for gardening services, aligning with the precedent established by a previous Division Bench ruling, and ultimately ruling in favor of the Assessee in this case.