2014 (6) TMI 730 - AT - Service Tax

Denial of refund claim - CENVAT Credit - Business Support Service, online information and database access or retrieval service, maintenance and repair service, development and supply of content service - Held that - Respondents are providing three output services out of which two services are classifiable under the category of online information and database access or retrieval service, development and supply of content services which is a separate category altogether and is to be accepted. Similarly the data delivery service provided by the respondent is also a taxable service under the same category. Therefore in respect of these two services, the CENVAT credit availed in respect of input services would be eligible. In respect of IT and system services, both sides agree that credit could not be available during the relevant period to the extent of invoices relatable to this service. The learned counsel agrees to quantify and submit a statement to the original authority giving details under each category which can be verified and decided afresh - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
Refund of service tax on input services claimed by respondent under different categories - Rejection of refund claims by original authority - Appeal by respondent allowed by Commissioner (A) - Revenue's appeal against the decision.

Analysis:
The respondent, registered for providing taxable services, filed refund claims totaling Rs.39,25,141/- for service tax paid on input services from July 2007 to March 2008, which were rejected by the original authority. The rejection was based on the ground that the output service provided by the respondent fell under information technology service, excluded from Business Auxiliary Service, making it exempt from service tax, thus rendering the CENVAT credit on input services unavailable. The Commissioner (A) allowed the refunds, leading to the Revenue's appeal.

Both parties agreed that the respondent provided three output services, with two falling under online information and database access or retrieval service, development and supply of content services, which were taxable. The data delivery service provided by the respondent was also considered a taxable service. It was acknowledged that CENVAT credit on input services would be eligible for these two taxable services. However, for IT and system services, both parties agreed that credit could not be available during the relevant period for invoices related to these services. The learned counsel agreed to provide a detailed statement to the original authority for verification and decision. Consequently, the impugned order was set aside, and the matter was remanded to the original adjudicating authority for a fresh decision, considering the observations made. The adjudicating authority was instructed to consider the grounds raised in the Revenue's appeal and the submissions by the respondent. The appeal was finally decided, and the respondent's cross objection was disposed of.

In conclusion, the judgment addressed the rejection of refund claims by the original authority, the allowance of refunds by the Commissioner (A), and the subsequent appeal by the Revenue. It clarified the eligibility of CENVAT credit for specific taxable services provided by the respondent and the exclusion of credit for certain services. The matter was remanded for fresh adjudication, emphasizing the need for a detailed statement to be submitted for verification.