2016 (9) TMI 1398 - AT - Service Tax

100% EOU - refund of service tax paid - N/N. 5/2006-ST dated 14.03.2006 - input services - works contract service - business auxiliary service - public relation management service - architect services - club or association services - testing service - packaging activity services - Held that - with regard to input service relating to works contract, business auxiliary service, architect service and public relation management service, appellants are entitled to refund under Rule 5 - with regard to other three services, namely, club or association services, testing service, packaging activity services, appellants claim is dismissed being not pressed for as the amount are too meager - appeal allowed in part.

Summary

Issues:
Refund claim of service tax paid on input services under Notification No 5/2006-ST dated 14.03.2006. Denial of refund on works contract service, business auxiliary service, public relation management service, and other services.

Analysis:
The appellant, a software Export Oriented Unit, filed a refund claim of service tax paid on input services under Notification No 5/2006-ST for the period July 2010 to September 2010. The appellant was registered under various service tax categories and engaged in software development services. A show-cause notice was issued seeking to reject the refund, leading to a partial disallowance of the refund by the Dy Commissioner. The appellant appealed to the Commissioner, who allowed the appeal for certain services but disallowed it for others. The appellant then filed the present appeal against the Commissioner's order.

The issue in all three appeals was the denial of refund on works contract service, business auxiliary service, public relation management service, and other services. The appellant's counsel argued that the refund was denied due to a lack of nexus between the input service and the output service. The appellant did not press for three input services due to the small amount involved. However, for works contract service, business auxiliary service, architect services, and public relation management service, the appellant contended that these services fell within the definition of input service as per Rule 2(l) of CENVAT Credit Rules 2004. The appellant also highlighted that the department had allowed refunds for these services in subsequent periods. The appellant cited various decisions in support of their argument, emphasizing a broad interpretation of the definition of input service by courts and Tribunals.

After considering the arguments and cited decisions, the judge partially allowed the appeal. The judge held that the appellant was entitled to a refund under Rule 5 for input services related to works contract, business auxiliary service, architect service, and public relation management service. However, the appellant's claim for other services was dismissed as not pressed for due to the insignificance of the amount involved. Therefore, all three appeals were partly allowed based on the above findings.