2015 (10) TMI 1999 - AT - Service Tax

Refusal for Refund of CENVAT Credit input services - export of output services - Event Management Service and Mandap Keeper services and Event Management Services Rejection of order of refund claim is unsustainable - Impugned order is set aside and appeal is allowed Decided in favour of the Appellant.

Summary

Issues:
Challenge to the denial of refund of Cenvat credit for BPO services provided to overseas clients under Business Auxiliary Services (BAS) category.

Analysis:
1. The appellant, a BPO service provider, challenged the denial of refund of Cenvat credit for services provided to overseas clients under the BAS category. The primary adjudicating authority denied the claim for Event Management Services, Sponsorship Services, and Works Contract Services. In appeal, the Commissioner (Appeals) allowed the claim for works contract but disallowed the others. The appellant contended that the impugned services were used for sponsoring and conducting events, which were essential for providing output services exported. The Counsel argued that if the services qualified for availing credit, the rejection of refund was unjustified, citing Circular No. 120/01/2010-ST. The appellant emphasized that all input services were used for providing exported output services.

2. The DR supported the impugned order, stating that the Commissioner (Appeals) rightly rejected the refund claim. The appellant failed to demonstrate how the absence of the services would affect the efficiency of output services. The DR highlighted the lack of specificity regarding the role of the appellant in sponsorship services, emphasizing the need for a nexus between the sponsored events and the output services to allow credit refund.

3. The Tribunal noted that the disputed period predated the broader definition of input services effective from 1.4.2011, which included "activities relating to business." Judicial precedents indicated that service tax credit was admissible if the expense was related to the business of the assessee. The appellant argued that Event Management Services facilitated recruitment, workshops, and brand promotion, enhancing customer base and business growth. The appellant's substantial increase in domestic and international business supported the claim that the impugned services were essential for business activities. Citing the decision in Coca Cola India (P) Ltd. Vs. CCE Pune-III, the Tribunal held that all activities related to business fell within the definition of input services. Refund for similar services had been allowed in the appellant's previous case, further supporting the claim.

4. Consequently, the Tribunal found the rejection of refund for Event Management and Sponsorship Services unsustainable and set aside the impugned order. The appeal was allowed based on the detailed analysis and supporting legal principles.

By: Ms. Sulekha Beevi C.S., Member (Judicial)