elgibility of service tax credit on gardening, Service Tax

[Ramakrishnan Seshadri]

Dear Sir,

We are maintaining a garden in our factory.

We are receiving service tax charged invoices for the garden maintenance work.

The service tax credit can be taken if the garden is maintained as per statutory requirement.

what is the statutory requirement for maintaining the garden in a factory.

The service tax charged on the garden maintenance is eligible for credit or not.

could any body reply for the same.

Thanks & Regards,

S.Ramakrshnan.

Posts / Replies

[Ashish Chaudhary]

Prior to amendment in the definition of Input Service vide Finance Act 2011, the credit on gardening service was admissible as credit. However, after the revised definition, it is difficult to claim the credit on the same.

[Pradeep Khatri]

Dear S. Ramakrshnan,

If as per Factory Act,1948 or as per the State Policy (While granting the permission for establish factory) it is mandatory to keep 20 percent or 25 percent or 30 percent area of the factory premises green, it is construed as Statutory requirement.  If it is so, then, you may avail the CENVAT credit though Department may litigate it.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)

[Naveed S]

Service tax credit has no relevance with any statutory requirement, credit is to be availed only in terms of the definition of input service as provided under cenvat credit rules, 2004.

Hence, such credit does not appear to be eligible for availment of service tax credit, even otherwise the credit amount being negligible, better to avoid litigation with the department.

[YAGAY AND SUN]

2015 (4) TMI 363 - CESTAT CHENNAI

M/s. Caress Beauty Care Products Pvt Ltd Versus Commissioner of Central Excise, Chennai-III

E/ST/40384/2014, E/40240/2014

Order No. - FINAL ORDER NO.41020/2014

Dated - 24 December 2014

Denial of CENVAT Credit - Gardening and House Keeping Services - whether the appellant is eligible for availing input service credit on gardening and house-keeping services, which was disallowed by the Commissioner (Appeals) in the impugned order - Held that:- appellant is a manufacturer of shampoo and manufacturing cold cream registered with central excise. As seen from the Pollution Control License Order dated 2012.2004 (sic) and Schedule-M of the Drug Control Act, it is mandatory for the appellant to maintain green cover and also should use the effluent treated water and keep the factory premises clean. Therefore, as per the statutory requirement, the appellant is required to maintain gardening and green cover and plants and cleanliness of the manufacturing premises. The case law relied upon by the appellant in the case of Murugappa Morgan Thermal Ceramics Ltd. (2013 (4) TMI 384 - CESTAT AHMEDABAD), applicable to the present case. The Tribunal rightly held that the services used for maintaining the garden will be admissible as it is required to maintain green cover as per law. Whereas, the case law relied upon by the Ld. AR M/s. Tyco Sanmar and M/s. Xomax Sanmar (2010 (8) TMI 711 - CESTAT, Chennai) wherein the issue relates to the cenvat credit on landscaping services and the same is not applicable to the facts of the present case. I hold that the appellant is eligible for credit on gardening and house-keeping services - Decided in favour of assessee.

 

 

Judgment / Order

 

 

R. Periasami,J.

For the Appellant : Mr R J Pillai, Consultant

For the Respondent : Ms Indira Sisupal, AC (AR)

ORDER

Since, the issue involved is in narrow compass, after disposing the stay application the main appeal itself is taken up for disposal.

2. The brief facts of the case are that the adjudicating authority has disallowed the cenvat credit of ₹ 97,391/- as ineligible credit availed on ‘Gardening and House Keeping Services'. On appeal the Commissioner (Appeals) in the impugned order partially allowed their appeal and allowed input service credit on manpower supply service used in production line, loading and unloading of goods, production supervision services etc., and disallowed the input service credit on manpower used in gardening and house-keeping services and directed the lower authority to re-quantify the credit amount pertaining to ineligible input service credit. Hence, the present appeal.

2. Heard both sides

3. The Ld. Consultant appearing on behalf of the appellant submits that as per the directions of the Commissioner (Appeals), the Superintendent of Central Excise vide Order-in-Original No. 9/2014 dated 10.10.2014, has quantified the ineligible credit as ₹ 67,312/- and also imposed equal penalty. He submits that the appellant is a manufacturer of shampoo and cold cream and paying excise duty. Therefore, to maintain green cover in their factory area as per statutory requirement, it is essential to engage manpower and they are eligible to avail the input service credit. He submits that both gardening and house-keeping services are essential as per the Pollution Control Act and Drug Control Act. He relies upon the Pollution Control Board's consent Order No. 173 dated 20.12.2004 and as per the clause 16,17,19,23 and 27 the appellants have to maintain green cover. Therefore, they are eligible for the input service credit on gardening and house-keeping services used in their manufacturing premises. The Ld. Consultant relies upon the following case laws:-

1. Murugappa Morgan Thermal Ceramics Ltd. Vs. CCE, Ahmadabad-III 2014 (33) STR 181 (Tri.-Ahd.)

2. CCE, Surat-II Vs. Gujarat State Fertilizers and Chemicals Ltd. 2013 (291) ELT 375 (Tri.- Ahmd.)

4. On the other hand, the Ld. AR appearing on behalf of the Revenue reiterates the findings of the Commissioner (Appeals) and gardening is not an input service for manufacture of excisable goods. She relied upon the Tribunal Order in the case of M/s. Tyco Sanmar and M/s. Xomax Sanmar Vs. CCE, Trichy, Final Order No. 917-918/2010 dated 20.08.2010, wherein credit has been disallowed on gardening/landscaping etc as these services are not related to the manufacture of final products.

5. I have carefully examined the submission of both the sides. On perusal of the records, I find that the short issue to be decided is whether the appellant is eligible for availing input service credit on gardening and house-keeping services, which was disallowed by the Commissioner (Appeals) in the impugned order. There is no dispute on the fact that the appellant is a manufacturer of shampoo and manufacturing cold cream registered with central excise. As seen from the Pollution Control License Order dated 2012.2004 (sic) and Schedule-M of the Drug Control Act, it is mandatory for the appellant to maintain green cover and also should use the effluent treated water and keep the factory premises clean. Therefore, as per the statutory requirement, the appellant is required to maintain gardening and green cover and plants and cleanliness of the manufacturing premises. The case law relied upon by the appellant in the case of Murugappa Morgan Thermal Ceramics Ltd. (supra), applicable to the present case. The Tribunal rightly held that the services used for maintaining the garden will be admissible as it is required to maintain green cover as per law. Whereas, the case law relied upon by the Ld. AR M/s. Tyco Sanmar and M/s. Xomax Sanmar (supra) wherein the issue relates to the cenvat credit on landscaping services and the same is not applicable to the facts of the present case. I hold that the appellant is eligible for credit on gardening and house-keeping services. Accordingly, the appeal is allowed. The stay petition is also disposed of.

(Order pronounced and dictated in the open Court)

[Manoj Agarwal]

Cenvat Credit is available as input service for garden maintenance work at factory, as it is a necessary service indirectly used in the manufacture of goods and becomes part of cost of product. It has the effect of increasing the productivity and maintaining good health of the workers. If the same service is used at any premises other than factory, then the same is unavailable.