Whether the cenvat credit on outdoor catering in guest house, Garden Maintenance, house keeping at guest house, house keeping at factory, picnic and jungle cutting services is allowable? & Whether penalty can be imposable in case of issue involving interp

PJ/Case Laws/2011-12/1124

Prepared By:
CA. Rajani Thanvi &
Bharat Rathore

Case: L’Oreal India Pvt. Ltd. Vs Commissioner of C. Ex., Pune-I

Citation: 2011(22) S.T. R. 89 (Tri.- Mumbai)

Issue: -Whether the cenvat credit on outdoor catering in guest house, Garden Maintenance, house keeping at guest house, house keeping at factory, picnic and jungle cutting services is allowable?

Whether penalty can be imposable in case of issue involving interpretation of statutes or not?

Brief Facts: -The appellant has taken service tax credit on the services mentioned hereunder below:

Outdoor catering service
Garden maintenance
House Keeping at Guest House
House Keeping at Factory
Picnic and Jungle Cutting

The Adjudicating authority has denied service tax credit on these services holding that these service are not relating to manufacturing activity hence appellant is not entitled to take service tax credit, as per Rule 2(1) of Cenvat Credit Rules,2004

Appellant’s Contentions:- The appellant submit that services of out door catering service, gardening, housekeeping of guest house and factory premises are very much related to business activity, who is engaged in the manufacturing activity of excisable goods. With regard to jungle cutting services are keep our finished product bacteria free, we have to maintain atmosphere around our factory completely free of bacteria etc. with regard to picnic service is for the employees for the factory, which gives the boosting to do the employees to do work in their factory effectively.

The appellant also submit that the catering service has been availed by them in their guest house for business activity and not for any welfare of the society.

Respondent’s Contentions: -respondent submit that it is the duty of the appellant to prove the nexus of the services availed by them with their manufacturing activity, which they failed in all the above mentioned services hence the input service credit on said services not be allowed.

Reasoning of Judgment: - The Hon’ble tribunalreferred to judgment given in The Commissioner of Central Excise, Nagpur Vs Ultratech Cement Ltd. [2010 TIOL 745 (H.C.)] wherein the Hon’ble High Court has held that if the assessee (Manufacturer) is availing any service in the course of their business activity then the assessee is entitled for input service credit. The Hon’ble Tribunal is of the view that in this case there is no doubt about the fact that guest house has been maintained by the appellant for their business activity and not for any welfare of the society. Hence, the appellant are entitled for service credit on outdoor catering service/ house keeping service except for the portion of their service for which they have recovered some amount from the persons staying in guest house. With regard to garden maintenance service and house keeping service of the factory as they are availed by the appellants in the course of their business, appellant is entitled for input service credit. With regard to picnic services, this service does not have any relation with business activity. Hence, the input service credit on picnic service is denied.

Finally on jungle cutting service, which is required by the appellant to keep the environment bacteria free in the surroundings of their factory which amounts to availment of the said service for their business of manufacturing. Hence, the appellants are entitled for availment of input service credit on these services also.

The Hon’ble tribunal also found that the issue involved of interpretation of statute no penalties are warranted in this case. The appellant shall pay interest on services on which credit has been denied.

Decision: - Appeal partly allowed.

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PJ/Case Laws/2011-12/1124

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