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2013 (11) TMI 259 - AT - Service TaxEligibility of Cenvat Credit - Security services of residential colony scope of input services Rule 2(l) of CCR - Waiver of Pre-deposit Held that - Following COMMISSIONER OF CENTRAL EXCISE & CUSTOMS Versus GUJARAT HEAVY CHEMICALS LTD 2011 (5) TMI 132 - GUJARAT HIGH COURT - the act of providing residential quarters by the manufacturer to its employees was voluntary - Providing security service in such residential quarters was also an act voluntary in nature - Appellants do not have prima facia case in their favour the entire service tax amount with interest directed to deposit as pre-deposit upon such submission there would be waiver of Penalty.
Issues:
- Waiver of pre-deposit and stay against recovery of duty and penalty confirmed against the appellants regarding the Cenvat Credit availed on Security Services provided to their residential colony. Analysis: 1. The appellants, a manufacturer of White Cement, availed Cenvat Credit on Security Services provided to their residential colony. The Revenue disallowed the Credit on the grounds that the services were not directly or indirectly connected to the manufacture of the final product and had no connection with business activity. 2. The appellant's advocate cited various decisions in support of waiver of pre-deposit, including the judgment of the Kerala High Court in the case of Binani Zinc Ltd., where conflicting decisions by different benches under the same Act were considered grounds for granting stay and waiver of pre-deposit. 3. The Revenue argued that the security services provided to the residential colony, located away from the factory, did not have any nexus to the final product and were not eligible for input services, citing the judgment of the Gujarat High Court in Gujarat Heavy Chemicals Ltd. 4. The Tribunal noted that the appellant had availed Cenvat Credit on the security services provided in the residential colony and considered the arguments presented by both parties regarding the eligibility of such services for credit. 5. The advocate for the appellant relied on various decisions, including the appellant's own case where the Tribunal granted stay on the availability of Cenvat Credit on different services provided in the residential colony. 6. The Tribunal examined the conflicting decisions and observed that there was no conflict of decisions of two High Courts on the question of eligibility of Cenvat Credit in respect of security services, ultimately directing the appellants to deposit the entire service tax amount with interest as pre-deposit. 7. The judgment emphasized that the decision of the Gujarat High Court in Gujarat Heavy Chemicals Ltd. prevailed over all decisions of the Tribunal regarding the eligibility of Cenvat Credit for security services in a residential colony, leading to the decision against granting waiver of pre-deposit in this case. 8. The Tribunal concluded that the appellants did not have a prima facie case in their favor based on the prevailing judgment of the Gujarat High Court, and therefore, directed them to comply with the deposit requirement within a specified timeframe to stay against the recovery of penalty. 9. The compliance deadline was set, and the judgment was pronounced in the court on a specific date, outlining the decision regarding the waiver of pre-deposit and stay against the recovery of duty and penalty confirmed against the appellants.
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