Cenvat credit for garden maintenance inside factory premises allowed where pollution-control conditions establish nexus with manufacturing activity.

Service tax paid on maintenance of a garden within factory premises was treated as eligible for Cenvat credit because the garden was maintained pursuant to pollution-control conditions attached to factory expansion, including the obligation to plant and maintain trees at a specified density. The Tribunal held that, in these circumstances, the service had a sufficient nexus with the manufacturing business and could not be regarded as unconnected with manufacturing activity. It also followed the Karnataka High Court view allowing credit for garden maintenance service. The service tax was therefore admissible as Cenvat credit.

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Issues: Whether service tax paid on maintenance of a garden within the factory premises is eligible for Cenvat credit under the Cenvat Credit Rules, 2004.

Analysis: The garden was maintained inside the factory premises and was supported by the conditions imposed by the pollution control authority for expansion of the factory, including the requirement to plant and maintain trees at the specified density. In these circumstances, the service could not be treated as unconnected with the manufacturing activity. The Tribunal also followed the view taken by the Karnataka High Court allowing credit in respect of garden maintenance service.

Conclusion: The service tax paid on maintenance of the garden was admissible as Cenvat credit and the appeal was allowed.

Ratio Decidendi: Where garden maintenance inside factory premises is undertaken pursuant to pollution-control conditions and bears a sufficient nexus with the manufacturing business, the service qualifies for Cenvat credit.

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