2013 (2) TMI 103 - AT - Service Tax

Denial of refund of CENVAT credit - Whether CENVAT credit can be availed in respect of service tax paid on - construction services - security services and maintenance of garden in respect of residential colony of the employees - Held that - Following the decision in case of MANIKGARH CEMENT (2010 (10) TMI 10 - BOMBAY HIGH COURT) and GUJARAT HEAVY CHEMICALS LTD (2011 (5) TMI 132 - GUJARAT HIGH COURT) that such provision of service is welfare activity and therefore service tax credit as claimed in respect of such services is not admissible. In favour of revenue Whether CENVAT Credit in respect of service tax paid on telephone services installed in the residence of officers is allowed - Held that - Following the decision in case of ITC LTD.(2009 (1) TMI 192 - CESTAT, CHENNAI) that such credit is admissible. In the absence of any contrary decision, follow the same and hold that the appellants are eligible for credit of service tax paid on telephone services in respect of telephone installed in the residence of employees. In favour of assessee

Summary

Issues:

1. Denial of refund of cenvat credit on service tax paid on construction services, security services, maintenance of garden, and telephone services.

Analysis:

The appellant appealed against the denial of refund of cenvat credit on various services including construction, security, maintenance of garden, and telephone services. The decision was based on the precedent set by the Hon'ble Supreme Court in Maruti Suzuki Ltd. v. CCE, which was related to inputs and not services. The issue of cenvat credit availability for maintenance, civil construction, and security services in a residential colony was considered by the Hon'ble High Courts of Bombay and Gujarat. Both courts concluded that such services are welfare activities, and therefore, service tax credit for these services, excluding telephone services, is not admissible. However, regarding telephone services, the Tribunal in the case of ITC Ltd. v. CC&E held that the credit is admissible. Thus, the appellate tribunal followed the Tribunal's decision and ruled that the appellant is eligible for credit of service tax paid on telephone services installed in the residence of employees.

Therefore, the impugned order denying the refund was set aside, and the matter was remanded to the original adjudicating authority for the sanction of the refund admissible for telephone services as per the observations made in the judgment.