2015 (8) TMI 595 - AT - Service Tax

Cenvat Credit - various input services - nexus with output - Refund claim of unutilized Cenvat credit - Rule 5 - Export of services - Held that - service of renting Car parking space used for parking of the vehicles of the Officers/Employees of the assessees Company has nexus with the business of the assessee - Credit allowed. Hotel bills for stay of auditor when he visited Chennai for audit of the appellants Company - Held that - Auditing is an essential activity for the Company. The definition of input services is so wide, and it does not restrict or confine the scope of the service mentioned in the inclusive part. - Credit allowed. Cleaning services - dry cleaning of carpet, cleaning of chairs and glass etc. - Held that - cleaning services has nexus with business activity of manufacture when cleaning service are undertaken in the premises of the appellants Company. - Credit allowed. Renting of equipments for organizing events and Event Management Service - Held that - In a catena of decisions it has been laid that any service in relation to the business of providing the output service would get covered. - credit allowed. Advertisement and Sponsorship Service - Department contends that the appellants being a software company engaged in export, these input services pertains to brand HCL which is widely known for hardware and therefore the appellants are not entitled to credit. - Held that - appellant has nowhere stated in the reply that these input services were availed for promotion of hardware - the observation of the adjudicating authority is factually wrong - credit allowed. Out of pocket expenses - Held that - The words out of pocket expenses is too wide and lacks definiteness as to the kind of service which would qualify to be an input service. - credit cannot be allowed without specification - credit denied. Visa and Immigration Services - pertaining to the spouse and daughter - Held that - These services do not qualify to be input service to avail credit - credit denied. Rent-a-Cab Service - Held that - According to appellants the service is used to pick up and drop the employees on daily basis so that they reach on time and these facilitate the output services. It has been settled in a series of judgments that Rent-a-cab service qualifies as input service for the relevant period. - credit allowed. Accommodations Services for stay of employees - Held that - The services for accommodation of employees in different places of the country in order to make ready the software for export cannot rule out the possibility of use of such services for personal purpose. - Credit denied. Decided partly in favor of assessee.

Summary

Issues:
Challenge to denial of Cenvat Credit refund on various input services.

Analysis:
1. The appeal challenges the denial of Cenvat Credit refund for the period October 2011 to December 2011. The appellants engaged in taxable services filed a refund claim under Rule 5 of the Cenvat Credit Rules 2004. The adjudicating authority rejected a refund claim of &8377; 29,10,826, later reduced to &8377; 77,540 by the Commissioner (Appeals), disallowing credit of &8377; 28,33,287 on various input services. The appeal contests this denial.

2. Car Parking Service refund was initially denied, citing lack of nexus with the exported service. However, based on precedents establishing the nexus between car parking services and business activities, the Tribunal allowed a credit of &8377; 37,427 for car parking services.

3. Room Service Charges for auditing were contested. The Tribunal held that auditing is an essential activity for the company, falling within the wide definition of input services, thus allowing a credit of &8377; 1,442 for room service charges.

4. An amount of &8377; 28,292 for cleaning services was initially disallowed. However, based on precedents establishing the nexus between cleaning services and business activities, the Tribunal allowed the credit for cleaning services.

5. Renting of equipment for events and event management services were initially denied due to a perceived lack of nexus with exported services. The Tribunal allowed a credit of &8377; 6,95,878 for renting of equipment and &8377; 11,001 for event management services, citing a wide interpretation of input services related to business activities.

6. Vat Registration charges were denied due to defective documentation, upheld by the Tribunal for lack of ascertainability from the documents.

7. Advertisement and Sponsorship Services were initially denied, but the Tribunal allowed a credit of &8377; 18,49,953, rejecting the denial based on assumptions and presumptions.

8. Out of Pocket expenses credit was denied as lacking a clear nexus with exported services, upheld by the Tribunal due to the broad and indefinite nature of the term "out of pocket expenses."

9. Visa and Immigration Services credit was partially allowed for employee visits abroad but disallowed for spouse and daughter, upheld by the Tribunal for not qualifying as input services.

10. Garden Maintenance Services credit was allowed based on precedents establishing them as input services.

11. Rent-a-Cab Service credit was allowed for the relevant period, citing precedents recognizing it as an input service.

12. Accommodation Services credit was denied for not being directly related to output services, upheld by the Tribunal for potential personal use.

13. The Tribunal allowed credits for car parking services, room service charges for auditing, dry cleaning charges, renting of equipment/event management, advertisement and sponsorship service, maintenance of garden, and rent-a-cab services, while disallowing credits for Vat registration services, out of pocket expenses, fee for visa and immigration, and charges for accommodation. The appeal was partly allowed with consequential relief.