Whether Housekeeping and gardening services will fall in the ambit of input services and therefore CENVAT credit be admissible on that service?

PJ/Case Law /2016-17/3257

Case- COMMR. OF C. EX., & S.T., LTU, CHENNAI Versus RANE TRW STEERING SYSTEMS LTD.

Citation- 2015 (39) S.T.R. 13 (Mad.)

Brief Facts-The brief facts of the case are that aggrieved by the order of the Tribunal in allowing the appeal filed by the assessee/respondent, the appellant/Revenue is before this Court by filing the present appeal. The respondent/assessee, in this case, are manufacturers of parts of power steering systems, test Bench and parts of test Bench falling under Chapters 87 and 90 of the first schedule to the Central Excise Tariff Act, 1985. In terms of the Cenvat Credit Rules, 2004, the assessee is availing credit of duty paid on various inputs and capital goods. The assessee had availed credit of service tax paid on housekeeping and gardening services. Since the assessee was not eligible to avail credit of service tax on these services, a show cause notice was issued by the Deputy Commissioner of Central Excise, Tiruchirappalli-II Division, proposing to recover credit of Rs. 3,30,486/-. After due adjudication, the Deputy Commissioner disallowed the credit and also imposed penalty.
Against the said order, the assessee preferred appeal to the Commissioner (Appeals). The said appeal was dismissed by the Commissioner (Appeals) against which the assessee filed an appeal before the Tribunal. The Tribunal, following the decision of the Co¬ordinate Bench in the case of ISMT Ltd. reported in 2010-TIOL-27 = 2010 (20) S.T.R. 68 (Tri.-Mum.) and Millipore India Ltd. reported in 2009-TIOL-490 = 2009 (13) S.T.R. 616 (Tri.-Bang.) = 2009 (236) E.L.T. 145 (Tri.-Bang.), allowed the appeal. Aggrieved by the said order of the Tribunal, the appellant/Revenue is before this Court by filing the present appeal

Appellant’s Contention-The contention of appellant is that the Cenvat credit should not be allowed to the assessee of the service tax paid on housekeeping and gardening services as the service used was not directly or indirectly in or in relation to the manufacture of final products (or) used directly or indirectly in or in relation to the clearance of final products upto the place of removal.
Respondent’s Contention- The assessee had availed credit of service tax paid on housekeeping and gardening services by assuming it as part of input services. Learned counsel appearing for the respondent/assessee brought to the notice of this Court that the said issue has been considered by the Karnataka High Court in favour of the assessee. Learned counsel for the appellant also fairly concedes the same.
Reasoning of Judgement- In the case Bangalore-II v. Millipore India Pvt. Ltd. [2012 (26)S.T.R. 514 (Kar.)], the Division Bench of the Karnataka High Court had occasion to consider similar issue and in the facts of the said case, while considering the definition ‘input services’ as defined under Section 2(l) of the Cenvat Credit Rules, 2004, the Karnataka High Court held as under :-
The definition of input services is too broad. It is an inclusive definition. What is contained in the definition is only illustrative in nature. Activities relating to business and any services rendered in connection therewith, would form part of the input services. Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc., of the office premises. At any rate, the credit rating of an industry is depended upon how the factory is maintained inside and outside the premises. The Environmental law expects the employer to keep the factory without contravening any of those laws. That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof. In that view of the matter, we do not see any infirmity in the order passed by the Tribunal. Accordingly, the substantial questions of law framed in this appeal are answered in favour of the assessee and against the Revenue.
Decision- Appeal dismissed.

Comment-As per the facts and circumstances of the case, the appeal is allowed in the favour of assessee/respondent as per the definition of ‘input services’ as defined under Section 2(l) of the Cenvat Credit Rules, 2004. The definition of input services is inclusive definition so therefore all activities relating to business and any services rendered in connection therewith, would form part of the input services.

Prepared by- Akshit Bhandari

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PJ/Case Law /2016-17/3257

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