Page 186 - GSTL_23rd July 2020_Vol 38_Part 4

552 GST LAW TIMES [ Vol. 38
ished product that adversely affects the manufacturing pro-
cess & the quality of the final product & the environment and
hence it is necessary to maintain such wild grass & other veg-
etation.
(g) The cost of such services forms part of the cost of the final
products and thus forms part of the value of taxable supply.
(h) Reliance is placed on the following judicial pronouncement of
the Tribunal (CESTAT), wherein it was adjudged that Cenvat
credit of Service Tax was allowable on expenditure related to
jungle cutting services to keep environment, factory and fin-
ished product bacteria free :-
In the case of L’Oreal India Pvt. Ltd. v. CCE - 2011 (22) S.T.R.
89 (Tri. - Mum.), the Hon. Mumbai Bench of the Tribunal held
that Cenvat credit of service tax paid on jungle cutting ser-
vices to keep environment, factory and finished product bac-
teria free are to be allowed as they have nexus with business
activity of Appellant.
96.4 After careful consideration of the above submissions and case law
cited by the Appellant, it is opined that the Appellant is entitled to avail ITC in
respect of expenditure incurred on the maintenance of such unused land in the
factory estate, as the same is essential for keeping the factory surroundings bac-
teria free, and keeping the roads adjacent to such lands commutation worthy,
which is important for smooth business operation of the Appellant. Thus, the
said maintenance services like cutting of the wild grass and other vegetation are
being used in the course or furtherance of business, hence these services may be
construed as input services, accordingly are eligible for ITC.
Now, let us examine the issue of admissibility of ITC, raised by the Ap-
pellant in question 2(c) of the advance ruling application, in respect of the vari-
ous inputs like medicines and others mentioned in “Annexure D”, purchased by
the factory for the hospital and expenditure on input services like maintenance,
upkeep and other activities also mentioned in “Annexure D” relating to such
hospital. It has been submitted by the Appellant that a hospital is run by Ord-
nance Factory Bhandara and is also located within the factory estate but outside
the precincts of the area where factory & administrative building is located; and
that the medicines and other facilities are provided to employees of the factory
without any consideration. The Appellant further submitted that Input Tax Cred-
it on the inputs like medicines and others mentioned in “Annexure D” purchased
by the factory for the hospital and other expenditures incurred on maintenance,
upkeep and other activities also mentioned in “Annexure D” relating to such
hospital should be admissible on the following grounds :-
(a) Hospital helps in keeping the employees fit and healthy, so that
they can contribute for furtherance of business of Ordnance Factory
Bhandara.
(b) As a part of welfare measure, it is necessary to provide the employ-
ees basic medicinal facilities within the factory estate itself since the
factory is located at a remote location.
(c) Cost of such medicines and expenditure on maintenance, upkeep
and other activities relating to such hospital forms part of the cost of
the final products and thus forms part of the value of taxable sup-
ply.
GST LAW TIMES  23rd July 2020  186