Page 179 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 545
Bombay High Court held that the expression ‘activities in relation to business’ in
the inclusive part of the definition of ‘input service’ further widens the scope of
input service so as to cover all services used in the business of manufacturing the
final products and that any service, used in relation to the business of manufac-
turing the final products, would be an eligible input service for availing Cenvat
credit. It was also held that the cost of any input service that forms part of value
of final products would be eligible for Cenvat credit.
75. Thus, it can be construed to mean from such decision that where the
input service used is integrally connected with the business of manufacturing the
final product and the cost of that input service forms part of the cost of the final
product, then credit of service tax paid on such input service would be allowable.
76. Therefore, applying the same logic, in the GST regime, the said fol-
lowing services can be said to be satisfying the twin necessities for availing Input
Tax Credit of GST in respect of expenditure on the said services; that is “input
services” and “used or intended to be used in the course or furtherance of busi-
ness” since as per Section 2(17) of the CGST Act, 2017, the term “business” in-
cludes “manufacture”.
77. In fact, the scope of availing Input Tax Credit has been further wid-
ened under the GST regime to include all inputs and input services used in the
course or furtherance of business vis-a-vis erstwhile Cenvat Credit Rules where
admissibility of Cenvat credit was restricted to input services used directly or
indirectly, in or in relation to manufacture of final product.
78. Maintenance of garden inside the factory premises :-
79. Here ‘factory premises’ means plant area where manufacturing ac-
tivity is carried out and administrative building. The services of maintenance &
upkeep of gardens that are located within the factory premises should be consid-
ered to be an “input service” as per Section 2(60) of the CGST Act, 2017 and
should also be considered to be “used or intended to be used in the course or
furtherance of business” as per Section 16(1) of the CGST Act, 2017 and Input Tax
Credit should be available in respect of expenditure done on such services on the
following counts :-
80. Gardening is essential & mandated by Maharashtra Pollution Con-
trol Board to maintain quality of ambient air & prevent air & water pollution and
also a condition precedent as laid down by the said Board, without which Ord-
nance Factory Bhandara cannot resort to its business activity of manufacturing.
81. Garden creates better atmosphere and environment which increases
working efficiency and thus its maintenance is essential in the course of business
for better running & furtherance of business.
82. Cost of such ‘gardening expenses’ forms part of the cost of the final
products and thus forms part of the value of taxable supply.
83. Reliance is placed on the following judicial pronouncements of the
Tribunal (CESTAT) & various High Courts, wherein it was adjudged that Cenvat
credit of Service Tax was allowable on expenditure related to maintenance & up-
keep of gardens in the factory :-
84. In M/s. Rane TRW Steering System Ltd. v. The Commissioner of Central
Excise and Central Tax [2018 (11) G.S.T.L. J187 (Mad.)], the Hon. Madras High
Court held that garden maintenance service would fall within the definition of
input service, in terms of Rule 2(l) of the Cenvat Credit Rules, 2004.

GST LAW TIMES  23rd July 2020  179