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November 2015

[2015] 61 taxmann.com 140 (Mumbai CESTAT) – ISMT Ltd vs. CCE Aurangabad

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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CENVAT credit availed of security service p rovided to guest house
shall be admissible as input service if such guest house is used for
lodging of employees and outside auditors who perform their service to
the appellants’ factory.

Facts:
Appellant availed CENVAT
credit for security service provided to guest house located near
factory used for lodging of employees and outside auditors who performed
their service to appellant’s factory. CENVAT credit of security
services was denied on the ground that it has no nexus with production
of goods and therefore did not qualify as input service. The confirmed
demand with interest and penalty was upheld in the first appeal.

Held:
The
Tribunal allowed the credit holding that the guest house is used for
lodging of the employees and outside auditors who perform their service
to the appellant’s factory and has a direct nexus with factory which
produces excisable goods and nothing is available on record to show that
guest house is used for any other purpose.

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