Page 183 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 549
respondent-Company to its employees at this remote location,
it would not be feasible for it to carry on its manufacturing ac-
tivity. The finding of the Commissioner that providing a colo-
ny to the employees was not directly or indirectly connected
with the manufacturing activity of the respondent-Company
was therefore, not borne out on facts. The staff colony, provid-
ed by the respondent-Company, being directly and intrinsical-
ly linked to its manufacturing activity could not therefore, be
excluded from consideration. Consequently, the services
which were crucial for maintaining the staff colony, such as
lawn mowing, garbage cleaning, maintenance of swimming
pool, collection of household garbage, harvest cutting, weed-
ing, etc., necessarily had to be considered as ‘input services’
falling within the ambit of Rule 2(l) of the CENVAT Rules,
2004.”
In the case of Mangalam Cement Ltd. v. Commissioner of C. Ex. & S.T., Jaipur-I [2016
(44) S.T.R. 422 (Tri. - Del.)], the Hon. Delhi Bench of Tribunal held that the resi-
dential colony was constructed adjacent to the factory because of the reason that
the factory manufacturing cement is located at a place which is away from the
city. Unless the residential colony is constructed near the factory, the appellant
will not be in a position to get the proper/adequate manpower for running its
plant activities and thus set aside the order passed by the Ld. Commissioner
(Appeals) of denying Cenvat credit of service tax taken by the appellant on
maintenance and repair work of their residential colony.
In the case of CCE Meerut v. M/s. Bajaj Hindustan Ltd. [2015 (40) S.T.R. 379
(Tribunal)], the dispute was in relation to allowance of Cenvat credit of Service
Tax paid on construction services to the respondent for construction of residen-
tial colony/dormitory located in the precinct of the factory. The Hon. New Delhi
Bench of the Tribunal held that construction of residential colony/dormitory ad-
jacent to the factory premises was the necessity because of the location of the fac-
tory in a remote area, where if the accommodation is not provided to
staff/workers, the continuous/round the clock manufacturing activity will ham-
per. Further, the cost towards such construction has also been considered as ex-
penditure in the books of accounts of the respondent. Therefore, such construc-
tion activity was held to be in relation to the business of the respondent and
therefore Cenvat credit was allowed in relation to such services.
In the case of Reliance Industries Ltd. v. CCE & ST, Mumbai [2016 (42)
S.T.R. 457 (Tri. - Mum.)], the dispute was in relation to allowance of Cenvat cred-
it of Service Tax in respect of services like construction services, repairs and
maintenance services, security service, manpower recruitment and supply ser-
vices, works contract services etc. It was noticed by the lower authorities that
these services on which credit was availed of service tax paid were received in
their residential township constructed for the employees. It was held by the
Mumbai Bench of the Tribunal that the expenses which were incurred by the ap-
pellant for the setting up of the township/colony for their employees are expens-
es which are in relation to the business activity of the appellant which is manu-
facturing of petroleum products. It was also noted that while arriving at the price
of the finished goods manufactured in these factory premises, appellant has con-
sidered the expenses incurred towards the residential township/colony as ex-
penses and included the same while arriving at the cost of production of the final
products manufactured in the factory premises and accordingly Cenvat credit
was allowed in relation to such services.
GST LAW TIMES  23rd July 2020  183