2010 (4) TMI 370 - AT - Service Tax

Appellate Tribunal grants CENVAT credit for Service tax on construction of staff quarters

The Appellate Tribunal CESTAT, Chennai ruled in favor of the appellant, allowing the appeal and granting CENVAT credit for Service tax paid on the ... Input service - Cenvat credit - services used in the premises of a provider of output service - entitlement to credit for construction of staff residential quartersInput service - Cenvat credit - services used in the premises of a provider of output service - Whether service tax paid for construction of staff residential quarters at bank premises is eligible for CENVAT credit as an input service. - HELD THAT: - The definition of input service under the CENVAT Credit Rules includes 'services used in the premises of a provider of output service.' The Tribunal found no dispute that the staff residential quarters constitute premises of the bank. Applying the statutory definition, services relating to construction of those quarters fall within the scope of input service. Consequently, the service tax paid on construction of the staff quarters is creditable under the CENVAT scheme. The Tribunal therefore set aside the order disallowing credit and allowed the appeal. [Paras 2]Service tax paid for construction of the bank's staff residential quarters is an input service used in the premises of the provider and is eligible for Cenvat credit.Final Conclusion: The impugned order disallowing CENVAT credit on service tax paid for construction of the bank's executive/staff quarters is set aside and the appeal is allowed, the Tribunal holding such services to be input services used in the premises of the provider and eligible for credit. The Appellate Tribunal CESTAT, Chennai allowed the appeal regarding disallowance of Cenvat credit for Service tax paid on construction of 'Executive Staff Quarters' at Karur. The Tribunal ruled that staff quarters are considered premises of the bank and qualify as 'input service' under Rule 2(l) of the CENVAT Credit Rules. Therefore, the assessees are entitled to take CENVAT credit of the entire Service tax paid.