Tribunal allows cenvat credit for garden maintenance service tax

The Tribunal ruled in favor of the appellant, allowing cenvat credit for service tax paid on manpower services used for garden maintenance within the factory premises. The Tribunal held that the garden maintenance service was essential for compliance with statutory pollution control standards, making it an eligible 'input service' under cenvat credit rules. The decision was based on the necessity of maintaining green cover as mandated by the Pollution Control Board for operating the factory, distinguishing it from other cases cited by the respondent. The impugned order was set aside, and the appeals were allowed in favor of the appellant.

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Issues: Denial of cenvat credit on service tax paid for manpower services utilized in garden maintenance.

In this case, the appellant sought cenvat credit for service tax paid on manpower services used for garden maintenance within the factory premises. The appellant argued that maintaining the garden was a statutory requirement under pollution control standards set by the State Government. They presented a consent letter from the Rajasthan State Pollution Control Board, which mandated that a certain percentage of the factory premises must be covered by tree plantation, failure of which could lead to revocation of operating consent. The appellant contended that since the disputed service was essential for compliance with statutory provisions, cenvat credit should be allowed, citing a previous Tribunal decision in the case of Hindustan Zinc Ltd. vs. CCE, Jaipur. On the other hand, the respondent argued that garden maintenance had no connection to the manufacturing process, thus cenvat credit should be denied, referencing decisions in other cases.

The Tribunal analyzed the issue and referred to the decision in the Hindustan Zinc case, where it was held that services indirectly essential for manufacturing operations, such as those required for compliance with statutory provisions, could be considered input services eligible for cenvat credit. Since the permission to operate the zinc smelter plant was contingent upon maintaining green cover as mandated by the Pollution Control Board, the service for garden maintenance was deemed necessary for compliance with statutory provisions and fell under the definition of 'input service.' The Tribunal distinguished the cases cited by the respondent, stating that those did not address the specific statutory requirements for garden maintenance as in the present case. Ultimately, the Tribunal ruled in favor of the appellant, allowing cenvat credit for the service tax paid on manpower supply service used for garden maintenance within the factory. The impugned order was set aside, and the appeals were allowed in favor of the appellant.

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