TMI Blog2019 (2) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... are outside the scope of GST, input tax credit shall not be available to the Appellant-I in respect of tax paid on goods and services procured by it for management, repair, renovation, alteration or maintenance services (including watch and ward services, security services, Plantation/Gardening/Landscaping services, etc.) pertaining to residential accommodation for its employees in township/colony. Input and input services for maintenance of guest house, transit house and trainee hotel - Held that:- The guest house of the Appellant-I is used for temporary accommodation of its employees as well as non employees. Thought the provision of guest house may not be treated as a perquisite, it cannot also be treated as an activity integrally related to the business of the Appellant-I. That means, the guest house service provided by the Appellant-I to its employees as well as non-employees cannot be treated as an activity in course or furtherance of its business - the tax paid on inward supplies of goods and services in connection with the guest house cannot be allowed the benefit of input tax credit - Decided against assessee (Appellant-1) Services availed in relation to plantation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the said Advance Ruling No.02/ODISHA-AAR/ 18-19 dated 28.09.2018 = 2018 (10) TMI 748 - AUTHORITY FOR ADVANCE RULING, ODISHA . Since both the appeals have arisen out of the sun authority intends to dispose of both the appeals vide this common order. 2.0. M/S National Aluminium Company Limited (Appellant-I) having GSTIN 21AAACN7449M1Z9 is registered in Bhubaneswar, Odisha and falls within the jurisdiction of State of Odisha. The Appellant-I is stated to be a manufacturer of aluminium metal through its refinery located at Damanjodi Smelter Plant at Angul (Odisha). It has townships at Angul, Damonjodi and Bhubaneswar for its employees. It also runs hospitals at Damanjodi and Angul for its employees and has guest houses for touring employees and guests. In its appeal petition, it has requested to set aside / modify the impugned Advance Ruling No.02/ODISHA-AAR/ 18-19 dated 28.09.2018 = 2018 (10) TMI 748 - AUTHORITY FOR ADVANCE RULING, ODISHA and allow input tax credit on inputs and input services used by them for maintenance of their township, security services and horticulture meant for township. 2.1. On the other hand, Commissioner, CX GST, Bhubaneswar (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishments will qualify for input tax credit. 4.0. M/s. National Aluminium Company Limited, (Appellant-I) in its grounds of Appeal, has assailed the ruling of AAR, inter-alia, on the following grounds.- (i) The AAR has wrongly held that the appellant's activities of management, maintenance or repair of the townships are not for or in relation to its core business while denying the credit of the tax paid on the goods and services used for management, maintenance or repair of the township of its employees, and Horticulture in township. The appellant undertakes such activities for its business in the course or furtherance of business and, therefore, it is entitled to take credit of tax paid on such services. (ii) The AAR has not rebutted the appellant's submission as made in its application and additional written submissions. Hence, the impugned order is liable to be set aside being non-speaking order because the AAR has not duly applied their mind to all the points and contentions raised by the appellant. Further, the AAR has overlooked the binding decisions. Hence, it has breached the judicial discipline. (iii) The infrastructure of township at Angul, Dama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or goods are not directly used for providing taxable service or manufacturing of goods. The ratio of these rulings is squarely applicable in the present GST regime as provisions of tax credit in the present GST are more extensive than the provisions of the Cenvat Credit Rules, 2004. (viii) A comparative reading of the provisions of the erstwhile cenvat credit rules and input tax credit in the present GST regime, it can be appreciated that earlier tax provisions were restrictive as compared to present tax provision. Hence, Tax credit in terms of section 16 of CGST Act, 2017 cannot be denied when such credit were allowed in the old regime. Hence, the AAR has wrongly and deliberately ignored the various rulings without appreciating that the ration of these rulings which are squarely applicable in the present case of the appellant. (ix) The AAR has ignored appellants submissions that the credit of GST paid on garden maintenance service will also be available whether such services availed is to comply with statutory requirement or to improve the efficiency of the employee. The garden is maintained because of statutory requirement to comply with pollution laws or for increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the Appellant -II that the ruling of the AAR holding that utility of service provide through plantation gardening within the plant area including mining area and the premises of other business establishment will qualify for input service credit appears to be incorrect. These services do not pass the legal test i.e. used or intended to be used in course or furtherance of business. The plantation and gardening within the plant area or the mines area of the applicant have no nexus with the manufacturing of Aluminium sheets and coils. 6.0. Appellant-I was given an opportunity to submit its objections and counter to the appeal filed by the Appellant-II. The Appellant-I In its counter, has submitted that section 16 of CGST Act entitles a registered person to take credit of input tax charged on any supply of services, which are used or intended to be used in the course or furtherance of his business. 7.0. During the course of the hearing on 07.01.2019, Shri P.K Sahu, Advocate on behalf of the Appellant-I reiterated the points as stated in its Grounds of Appeal and submitted an extract of relevant provisions of the CGST Act, 2017 and copy of some judicial pronouncements r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different situations and blocked credits i.e. ineligibility of input tax credit on different supply of goods and services. Section 17(5) (g) of the OGST/CGST Act specifically excludes input tax credit in respect of goods or services or both used for personal consumption i.e. credit is not admissible for private or personal consumption to the extent they are so consumed. This restriction is absolute and shall not be available under any situation/circumstances. 8.4. We find from Section 7 (1) (c) that the expression supply includes the activities specified in Schedule-I, made or agreed to be made without a consideration. Supply of goods or services or both between related persons, when made without a consideration and in the course or furtherance of business is listed at SI.No.2 of the said Schedule-I. Explanation to Section 15 of the OGST/CGST Act specifies that employer and employees are deemed to be related persons . Proviso to SI. No. 2 of the said Schedule- I says that gifts not exceeding fifty thousand rupees in value in a financial year by an employee (without consideration) shall not be treated as supply of goods or services or both. 8.5 The appellant has also brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given careful consideration to the submissions made by both the appellants. We have examined the relevant provisions of the OGST/CGST Acts. we have also gone through the judicial pronouncements referred to by Appellant-I. Our findings are given below. 9.1. The ruling of the AAR that inward supplies received by the Appellant-I by way of management, repair, renovation, alteration or maintenance service or goods received for furnishing the residential colony shall not qualify for input tax credit is found to be correct. Expenditure incurred by the Appellant-I towards construction, reconstruction, renovation, additions or alterations or repairs to the residential colony is not eligible for input tax benefit if the said expenditure has been capitalized. Moreover, provision of housing to its employees by the Appellant-I is nothing but a perquisite. This is admitted by the Appellant-I themselves in Para-C of page 25 of his appeal petition. As clarified by the CBIC vide its Press Release dated 10.10.2017, referred to by the Appellant-I, perquisites are not subjected to GST. Therefore, since the perquisites are outside the scope of GST, input tax credit shall not be available to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee and therefore, the tribunal was not justified in holding that the services such as repairs, maintenance and civil construction rendered at the residential colony constitutes 'input service' so as to claim credit of service tax paid on such services under Rule 2(1 ) of the CENVAT Credit Rules, 2004. 9.3. In view of the above, we find that the ratio of the aforesaid judgement of Hon'ble Bombay High Court is squarely applicable to the facts of the case and hence the appeal filed by the Appellant-I is not legally sustainable and hence is liable to be rejected and we hold accordingly. 9.4. However, the ruling of the AAR that the Appellant-1 is entitled to input tax credit of the tax paid on inward supply of input and input services for maintenance of guest house, transit house and trainee hotel is found to be not correct. As discussed in the previous paragraph, the provision of residential accommodation through transit house / trainee hostel is also a perquisite in favour of the employees and hence tax paid on inward suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence benefit of input tax credit should be available on such input/input services. In this regard, we just want to place on record the fact that the Hon'ble Bombay High Court, vide a subsequent order dated 25.10.2010 in in Central Excise Appeal No 7 of 2010 in the case of Commissioner Central Excise Vs M/s. Ultratech Cement Ltd. [2010(260) E.L.T. 369(Bom.)] = 2010 (10) TMI 13 - BOMBAY HIGH COURT , has interpreted the correct meaning of the order of the Honble High Court in the Coca Cola case. The relevant paras of the said order are extracted below:- 37. In the case of Coca Cola India Pvt. Ltd. (2009 (8) TMI 50 - BOMBAY HIGH COURT) a Division Bench of this Court has considered scope of the expression input service' as defined in rule 2(1) of 2004 Rules. In that case, the question for consideration was, whether a manufacturer of non alcoholic beverage bases (concentrates) is eligible to avail credit of service tax paid on advertisement, sales promotion, market research etc. The argument of the revenue in that case was that the advertisements are not relatable to the concentrate manufactured by Coca Cola India Pvt. Ltd. (2009 (8) TMI 50 - BOMBAY HIGH COURT) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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