2016 (6) TMI 322 - AT - Service Tax

Appeal granted for input credit on gardening services in manufacturing batteries

Tafe Ltd. (PSD - III) Versus Commissioner of Central Excise

The appeal was filed against the denial of input credit for service tax paid on gardening services for manufacturing storage batteries. The Tribunal held ... Eligibility of input credit - Service tax paid on the input service viz. gardening service - Appellant discharging central excise duty on the final product and availing credit on inputs as well as service - Held that:- in view of the Hon'ble Karnataka High Court decision in the case of CCE Bangalore Vs Millipore India Pvt. Ltd. [2011 (4) TMI 1122 - KARNATAKA HIGH COURT], the gardening service is an input service for the manufacturer who is covered under the Factories Act read with Tamil Nadu Pollution Control Board Act and accordingly the appellants are eligible for input service on the gardening service. - Decided favour of appellant with consequential relief Issues: Denial of input credit for service tax paid on gardening serviceAnalysis:The appeal was filed against the Commissioner (Appeals) order regarding the denial of input credit for service tax paid on the gardening service. The adjudicating authority had denied the credit and imposed a penalty. The appellants, engaged in manufacturing storage batteries for Automobiles/Motor Vehicles, were denied credit despite being registered with central excise and complying with relevant acts. The issue revolved around whether gardening service qualifies as an input service for the manufacturer under the Factories Act and the Tamil Nadu Pollution Control Board Act.The Tribunal referenced the decision of the Hon'ble Karnataka High Court in CCE Bangalore Vs Millipore India Pvt. Ltd. and its own ruling in JBM Auto System Pvt. Ltd. Vs CCE Chennai, both allowing credit on gardening services mandatory under the Factories Act. The Revenue relied on a previous Tribunal decision, which the Tribunal deemed inapplicable post the Karnataka High Court's ruling. Following the High Court decision, the Tribunal held that gardening service is indeed an input service for manufacturers covered under the Factories Act and the Pollution Control Board Act, making the appellants eligible for the input service credit. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.The judgment highlights the importance of aligning input credit denials with the specific requirements and regulations applicable to the manufacturer. It emphasizes the significance of legal precedent in determining the eligibility of services as input credits under relevant statutory provisions. The ruling provides clarity on the admissibility of input credit for services essential for maintaining statutory compliance and operational necessities within manufacturing facilities.