2017 (2) TMI 440 - AT - Service Tax

CENVAT credit - input services - Labor charges for drinking water and cleaning at Lorry Yard - Maintenance of cycle stand - erection of Cycle shed - Insulation works at recreational club - Held that - In the case of M/s. Coca Cola India Pvt. Ltd., 2009 (8) TMI 50 - BOMBAY HIGH COURT , the Honorable High Court had occasion to discuss the eligibility of credit on various input services. The subject services fall within the definition of input services and the Ld. Counsel has also explained the purpose for which the services were availed - credit eligible on these services - appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of credit of service tax on input services for the period April 2007 to September 2007.

Analysis:
The case involved a Show Cause Notice proposing to disallow and recover credit of service tax on input services amounting to ?3,16,050 taken by the appellants. The original authority confirmed the proposals, leading to an appeal before the Commissioner(Appeals). The Commissioner allowed credit on some services but disallowed ?54,350 on specific input services related to manpower recruitment, maintenance, and repair services.

The main contention on behalf of the appellant was that the period in question was before 01.04.2011, and the definition of input services included "activities relating to business." The appellant argued that the services in question, such as manpower recruitment for labor charges, maintenance of cycle stand, and repair services for cycle shed and insulation, were essential for the business of manufacturing, making them eligible for credit. Reference was made to previous judgments by the High Court of Andhra Pradesh and the Bombay High Court to support the claim.

On the Department's side, it was argued that the services lacked a nexus with the manufacturing activity of the appellant, thus rendering them ineligible for credit. However, the appellant's counsel provided explanations and legal precedents to establish the necessity and eligibility of the services for the business.

The Tribunal analyzed various judgments, including the case of M/s. Coca Cola India Pvt. Ltd., where the High Court discussed the eligibility of credit on input services. The Tribunal found that the subject services fell within the definition of input services and were essential for the business operations. Considering the explanations provided and the legal precedents cited, the Tribunal concluded that credit was indeed eligible on the disputed services. Additionally, it noted that a previous appeal by the department on the same issue was dismissed by the Tribunal based on monetary limits.

Ultimately, the Tribunal set aside the impugned order disallowing the credit, allowing the appeal with consequential reliefs, if any. The decision was pronounced and dictated in open court, providing a favorable outcome for the appellants regarding the disputed credit on input services.