CENVAT Credit and Traffic Islands
Are you flummoxed after reading this caption?
We too were until we read the contents of the mail sent by a netizen who is following TIOL stories closely. Here is what he has to say –
Sir, I am a registered manufacturer based in Nasik and availing CENVAT. Being a growing concern, I wanted to make my presence felt in this industrial town. Hence I opted for beautification of the traffic islands in the vicinity. The municipal authorities were helpful and allowed me to perform this gesture. In return, I was allowed to advertise my company's name on the iron grills enveloping the traffic island and also carry a plaque with my company name. The experiment proved a success and I am asked by the municipality to replicate the efforts at other places in the city. No doubt, maintaining the traffic island with greenery required me to hire the expertise of a company with a green thumb. They incidentally are registered with the Central Excise department and pay Service Tax under the category ‘Garden maintenance Services' and I have entered into an agreement with them.
On the invoices issued by the service provider, my company took CENVAT Credit and this has been objected to by the department citing the recent case of Kirloskar Oil Engines [] reported by Taxindia.
I feel that the department should not blindly follow this ratio for the simple reason that whereas in the case of Kirloskar Oil Engines, the garden maintenance services were used to beautify the gardens in the factory premises, in my case these services are indirectly used for advertising and sales promotion of my company's final products and hence satisfy the definition of input service given in rule 2(l) of the CENVAT Credit Rules, 2004. I request DDT seeks the views of Netizens and also give its valuable opinion. DDT replies – We can only say that you have got a good case on hand, especially as there is a contr judgement. In the Millipore India Ltd case - [], the Tribunal observed, “one can include even landscaping the surroundings of the factory as ‘input service'. In these days, much importance is given to keeping the environment of a factory in a proper manner”