2015 (2) TMI 45 - AT - Service Tax

CENVAT Credit - Various services - Held that - So far as Cenvat credit of ₹ 34,933/- in respect of outdoor catering service is concerned, the same is admissible in view of judgment of Hon ble Bombay High Court in the case of CCE, Nagpur v. Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT), as admittedly the number of workers in the appellant s factory is more than 250 and, hence, the providing of canteen facility to the factory workers is mandatory requirement of the provisions of Section 46 of the Factories Act. As regards the service tax credit of ₹ 27,560/- in respect of maintenance of lawns and gardens, I find that the maintenance of lawns and gardens is a condition imposed by the Rajasthan Pollution Control Board, while giving permission to the appellant to operate this factory, as per the provisions of Water (Prevention and Control of Pollution) Act, 1974 and also Air (Prevention and Control of Pollution) Act, 1981. In view of this, I am of the view that service tax credit in respect of the services for maintenance of lawns and gardens is also admissible. As regards, the service tax credit in respect of maintenance of cycle stand, the same is also a necessary requirement and, hence, the same is cenvatable service. As regards maintenance of guest house, I find that the providing and up-keeping of guest house, which is adjacent to the factory premises, is necessary business requirement inasmuch as the factory is located outside the city boundaries. In the same fashion, it stands held by various decisions that maintenance of residential premises is associated with business activities. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility for Cenvat credit of service tax paid on specific services.

Analysis:
The appellants, engaged in manufacturing fertilizers and chemicals, claimed Cenvat credit of central excise duty and service tax paid on inputs, capital goods, and input services under the Cenvat Credit Rules. The dispute centered around the eligibility of Cenvat credit for service tax paid on various services, namely outdoor catering services for canteen facilities, maintenance of lawns and gardens as per Pollution Control Board requirements, maintenance of cycle stand, and upkeep of a guest house adjacent to the factory premises.

The Assistant Commissioner disallowed a total service tax credit of Rs. 1,27,365, imposing recovery, interest, and a penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The appellant's counsel argued that the services in question were essential for compliance with legal requirements or business operations, citing relevant judgments to support their position. The Departmental Representative opposed the appeal, reiterating the findings of the Commissioner (Appeals).

After hearing both sides and examining the records, the Tribunal deliberated on each service individually. Firstly, the Tribunal found the outdoor catering service credit admissible as it was necessary for providing canteen facilities to over 250 factory workers, a requirement under the Factories Act. Secondly, the credit for maintenance of lawns and gardens was deemed eligible as it was a condition set by the Pollution Control Board for factory operation. Thirdly, the credit for maintaining the cycle stand was considered necessary for factory workers and thus cenvatable. Lastly, the credit for guest house maintenance was justified as it was a vital business requirement, especially since the factory was situated outside city limits.

Consequently, the Tribunal set aside the previous orders, allowing the appeal and granting consequential relief to the appellants.

In conclusion, the Tribunal's decision favored the appellants, recognizing the eligibility of Cenvat credit for the specified services based on legal requirements and business necessity, as supported by relevant judgments and regulatory provisions.