Broad input service coverage allowed CENVAT credit for housekeeping and garden maintenance, with penalty also set aside.

CENVAT credit on house keeping and garden maintenance services was treated as admissible because the definition of input service was applied broadly to cover services used in activities relating to business. On that basis, the services were found to have sufficient nexus with business operations, so denial of credit was unsustainable. The penalty could not survive once the credit disallowance failed, and it was therefore set aside.

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Issues: Admissibility of CENVAT credit on house keeping and garden maintenance services as input services, and the sustainability of the penalty imposed under the CENVAT Credit Rules, 2004.

Analysis: The definition of input service was applied in a wide manner to include services used in activities relating to business. House keeping and garden maintenance services were treated as having sufficient nexus with business operations. The denial of credit was therefore found unsustainable, and the penalty followed the fate of the credit disallowance.

Conclusion: The credit was held admissible and the penalty was set aside.

Final Conclusion: The appeal succeeded and the impugned order was set aside.

Ratio Decidendi: Services having a business nexus and falling within the wide ambit of input service qualify for CENVAT credit, and penalty cannot survive when the credit denial is unsustainable.

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