2018 (7) TMI 970 - AT - Central Excise

CENVAT Credit - input services - annual maintenance of lifts installed in the building - appellant herein is engaged in providing the taxable services of accommodation in hotel for lodging purposes - whether the service for getting the lift of the premises maintained and for getting the premises painted is an input service for the appellant on which the credit has rightly been availed or not? Held that - The inclusive part of the definition specifically includes the renovation or repair of the premises of provider of output services. It is an apparent and admitted fact that the appellant is providing output services of accommodation/ lodging from the said premises - The use of word repair and maintenance in the Works Contract, is not applicable to the given circumstances as the definition of Works Contract has to be read as a whole and the perusal thereof makes it clear that when the repair, maintenance, etc. is the part of a contract where construction is also an activity then that renovation will be covered under the definition of Work Contract else it will be very much inclusive part of the definition of input. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the service of maintaining lifts in the building qualifies as an input service for availing cenvat credit.

Analysis:

The appellant, engaged in providing taxable services of accommodation in a hotel, was audited by the Department for the period 01.04.2010 to 31.03.2015 and subsequently for April 2015 to March 2016. The Department observed that the appellant had availed cenvat credit on the annual maintenance of lifts installed in the building. A Show Cause Notice was issued, alleging the credit was wrongly availed as the lift maintenance service did not fall under the category of input service. The original Adjudicating Authority confirmed the demand, leading to the present Appeal. The appellant argued that the maintenance of lifts falls under the inclusive definition of input services, citing a Mumbai Tribunal case. The Department, however, relied on the definition of Works Contract and a decision of the Tribunal Hyderabad to justify the denial of credit.

The Tribunal analyzed the definition of input service under Rule 2(K) of Cenvat Credit Rules, 2004, which includes services used in modernization, renovation, or repairs of premises of the output service provider. The Tribunal noted that repair and maintenance are part of the Works Contract definition, but emphasized that the inclusive part of the definition specifically includes renovation or repair of provider's premises. Referring to a Supreme Court case, the Tribunal highlighted that the phrase "and includes" should not restrict the definition. It distinguished a previous case involving garage maintenance, emphasizing the relevance of the Red Hat India Pvt. Ltd. case to the current scenario.

Consequently, the Tribunal concluded that the Adjudicating Authorities had taken a rigid stance on the definition of input services, contrary to the Supreme Court's directive to interpret laws reasonably. The Tribunal set aside the challenged Order, allowing the Appeal in favor of the appellant.