Tribunal allows credit for gardening services, disallows hiring tractors post-2011. Appeal partly allowed.

The Tribunal allowed credit for gardening services as they were deemed to have a nexus with manufacturing activities, based on environmental clearance requirements. However, credit for hiring tractors was disallowed post-April 2011 due to the exclusion of services related to motor vehicles not classified as capital goods. The impugned order was modified to permit credit for gardening services but maintain the disallowance for hiring tractors. The appeal was partly allowed with consequential reliefs, if any.

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Issues:
Disallowance of credit on input services - Gardening service, hiring of Tractor for watering the gardens, Maintenance service, and Renting of Immovable Property service.

Analysis:
The appeal was filed against the order disallowing credit on input services by the Commissioner (Appeals). The appellant, engaged in Cement and Clinker manufacturing, availed credit on various services, leading to two Show Cause Notices for recovery of service tax credit. The adjudicating authority disallowed credit on certain services, imposing penalties. The Commissioner (Appeals) allowed credit for maintenance services and renting of immovable property but disallowed credit on gardening and hiring of tractors post-April 2011. The appellant argued that services were used to comply with environmental conditions, maintaining green areas as per clearance certificates. The appellant cited precedents where similar services were allowed for credit pre-2011. The Revenue contended that gardening and tractor services lacked a direct nexus with manufacturing activities.

The Tribunal analyzed the environmental clearance conditions mandating a green belt, emphasizing the statutory requirement to maintain green areas. Referring to previous judgments, the Tribunal held that services used to maintain green belts had a nexus with manufacturing activities, making them eligible for credit. Thus, the gardening services availed by the appellant were deemed eligible for credit. However, concerning hiring tractors for watering gardens, the definition of input services from April 2011 expressly excluded services related to motor vehicles not classified as capital goods. Since tractors were considered motor vehicles falling under this exclusion, the credit for hiring tractors was deemed ineligible. Consequently, the impugned order was modified to allow credit for gardening services but sustain the disallowance of credit for hiring tractors. The appeal was partly allowed with consequential reliefs, if any.

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