2009 (6) TMI 244 - AT - Service Tax

Input service credit - Telephones installed at the residence of the staff - there is no allegation that the Landline was not used in relation to business activity, denial of credit on Landline telephone is not justified. Cleaning & Maintenance of Garden, revenue submits that cleaning and gardening services were rendered outside the factory and, therefore, they are not eligible for credit. - Regarding denial of credit on Cleaning & Gardening services the original authority is directed to allow the credit subject to the verification as to whether services are rendered in relation to business activities - during the period when Pandal and Shamiana services was rendered, there was a strike called by the workers and as per the decision of the Management, Staff/Managerial staff continued their work inside the plant for which Company had made some arrangements like Pandal, caterer etc. in order to safeguard the employees working inside the plant from any strike disturbances - denial of credit on Pandal & Shamiana services are set aside in respect of Group personal Insurance Services, in number of cases, Tribunal allowed the credit on Group Mediclaim policy and Workmen s Accident Policy - hence denial of credit on insurance services are set aside

Summary

Issues:
Denial of credit on input services including Landline Telephone, Cleaning & Maintenance of Garden, Pandal Shamiana services, and Group insurance to employees.

Landline Telephone:
The Commissioner denied credit on the ground that the telephones were installed at the residence of staff. However, the appellant argued that the denial was unjustified as there was no allegation that the Landline was not used for business activities. Citing a case, it was emphasized that the installation location should not be a reason to deny credit if the phone is used for business purposes. The Tribunal agreed and set aside the denial of credit on Landline telephone.

Cleaning & Maintenance of Garden:
The Commissioner rejected credit on the basis that cleaning and gardening services were rendered outside the factory premises. The appellant contended that these services were related to the factory and thus eligible for credit. It was noted that service tax was paid on these services, and the denial based on tax levy was unjustified. The Tribunal directed that credit for "Cleaning and Gardening service" should be allowed if it is in relation to business activities.

Pandal & Shamiana Services:
The Commissioner stated that these services had no relation to the appellants' business activities. The appellant argued that these services were essential during a strike to ensure business operations continued smoothly. Referring to a Tribunal decision, it was highlighted that services like Pandal & Shamiana for business purposes are eligible for credit. The Tribunal found the denial of credit baseless and allowed the credit for Pandal & Shamiana services.

Group Insurance Services:
The Commissioner allowed credit for insurance of vehicles used in business activities but denied credit for personal insurance policies of employees. The Tribunal referred to previous cases where credit for Group Mediclaim and Workmen's Accident Policy was allowed, indicating that denial of credit on Group Insurance was unjustified. Consequently, the denial of credit on Landline Telephone, Pandal & Shamiana, and insurance services was set aside, and credit for Cleaning & Gardening services was allowed subject to verification of business relation. Penalties were also set aside, and both appeals were allowed accordingly.