2009 (7) TMI 139 - AT - Service Tax

Cenvat Credit input services security agency - The appellants contention that their factory situated at a remote place where no facilities were available for stay of their engineers and workmen, and it was, therefore, necessary to construct a residential colony for the employees for being available on the spot in order to maintain continuity in the process of cement manufacture, has not been disputed. Therefore, service provided is relatable to business and credit of service tax is admissible as the service in respect of repairs and maintenance, civil construction in relation to the residential colony are input services held that - appellants are entitled to avail the credit of duty paid on the security services utilized for residential purposes and allow the appeal with consequential relief to the appellant.

Summary

Issues: Denial of credit of service tax paid on security services for residential colony proximity to factory.

Analysis:
The judgment revolves around the denial of credit of service tax paid on security services for a residential colony near the factory. The appellant was denied credit on the basis that the services were not directly or indirectly related to the manufacturing process. However, referencing an earlier order, it was established that security agent services fall under the category of services specified in the Cenvat Credit Rules, making the credit admissible. The invoice clearly indicated that the service was provided for various areas, including the plant area and residential colony, justifying the credit claim.

The Learned DR referred to a Supreme Court judgment in a Central Excise Law context, but the Tribunal differentiated the applicability of that judgment to the definition of input services under the Cenvat Credit Rules. Citing another case, the Tribunal emphasized that services related to repairs, maintenance, and civil construction for a residential colony are considered input services, especially when necessary for business operations. The Tribunal drew support from various judicial decisions highlighting that expenses related to maintaining residential quarters for employees or repairing buildings are considered revenue expenditure essential for business continuity.

Consequently, the Tribunal ruled in favor of the appellant, allowing the credit of duty paid on security services used for residential purposes. The judgment emphasized the importance of input services related to business operations, even if they are for residential purposes near the factory. The decision provided consequential relief to the appellant, affirming their entitlement to avail the credit for the duty paid on security services utilized for residential purposes.