2014 (6) TMI 525 - AT - Service Tax

Input Service Credit Denied for Residential Colony Services

ASIAN PAINTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE (LTU), MUMBAI

The judge upheld the lower authorities' decision to deny input service credit for services used in a residential colony outside the factory, ruling that ... Cenvat Credit - input services - cable operator service, repair and maintenance service, manpower supply service, pest control service, telephones, Business Auxiliary Service used/received in the residential colony located outside the factory for residence of their employees has been denied by the lower authorities - in relation to manufacture - Held that : - any service availed in residential colony has no nexus with the manufacturing activity of the appellant. Therefore, input service credit is not available to the assessee - Following decision of CCE vs. Manikgarh Cement [2010 (10) TMI 10 - BOMBAY HIGH COURT] - Decided against assessee. Issues: Denial of input service credit for services used in a residential colony outside the factoryAnalysis:1. The appellant appealed against the denial of input service credit for various services used in a residential colony outside the factory for their employees. The lower authorities had denied the credit citing a lack of nexus with the business of manufacturing.2. The appellant's consultant referred to a case where the Andhra Pradesh High Court allowed input service credit for services used in a residential colony located in a remote area where the factory was situated. The appellant argued that they should be allowed the credit based on this decision.3. However, the respondent cited a different case where the Bombay High Court held that services availed in a residential colony have no nexus with the manufacturing activity and, therefore, are not eligible for input service credit. The respondent contended that the denial of credit was justified.4. After hearing both sides and considering the submissions, the judge noted that the matter fell within the jurisdiction of the Bombay High Court. Citing the decision in the Manikgarh Cement case, the judge held that services availed in a residential colony do not have a nexus with the manufacturing business, thus not entitling the appellant to claim input service credit.5. Consequently, the judge upheld the impugned order denying the input service credit for the services used in connection with the residential colony, as they were deemed to lack a connection with the appellant's manufacturing business. The appeal filed by the appellant was dismissed.