2015 (11) TMI 101 - AT - Service Tax

Refund claim - Refund of unutilized CENVAT Credit - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006 CE (N.T.) - Held that - Input services in the nature of works contract service, civil construction service, interior decoration service, architect service availed by the appellant in repair, renovation, modernisation of its office are eligible input service. It is the discretion of the Management of the assessee company to decide in what type of office and the location, it wants to work for providing the output service. I find that there is no dispute as regards the amount of service availed. Further the service of storage and warehousing, have been incurred admittedly for packing & moving gadgets or things from one office premises to another. As the appellant operated from more than one premises, the said service is admittedly an eligible input service. So far event management services are concerned, it has been explained that the same is incurred in organising conferences, training sessions and meetings which are essential for the smooth running and business promotion. Accordingly I uphold the same as eligible input service. So far the cable operator service is concerned, the same have been incurred for availing/seeing business channels on television sets, installed in the office premises for the staff to remain updated with the business news & developments which is essential for providing efficient output service. Thus the same is also held to be eligible input service. Formula as given in appendix 5 of the Notification No. 5/2006, only provides to work out the limit of eligible amount where an assessee has got both export and domestic turnover. Accordingly the eligible amount under appendix 5 shall be reworked without deduction of the amount towards credit allegedly wrongly availed, as the same are been found to be eligible. Accordingly there can be no deduction also for credit already utilised during the quarter. - Decided in favour of assessee.

Summary

Issues Involved:

1. Eligibility of certain input services for CENVAT credit refund.
2. Application of the formula for calculating eligible refund amount under Notification No. 5/2006.

Detailed Analysis:

1. Eligibility of Certain Input Services for CENVAT Credit Refund:

The appellant-assessee, engaged in providing various financial services, had their refund claims partially rejected on the grounds that certain input services were not eligible for CENVAT credit. The services in question included architect services, civil construction services, interior decorator services, storage and warehousing services, event management services, works contract services, and cable operator services. The adjudicating authority and the Commissioner (Appeals) held that these services did not impact the efficiency or were not consumed in providing the output services, thus rejecting the refund claims.

The appellant argued that these services were indeed used for the modernization, renovation, and repair of office premises, which are specifically included in the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004. They cited a previous Tribunal ruling in their favor, which held that input services used for modernisation, renovation, and repair of office premises are covered under the definition of input services.

The Tribunal agreed with the appellant, stating that the input services in question were indeed eligible. It emphasized that the management's discretion in deciding the office setup is crucial for providing output services efficiently. The Tribunal recognized the necessity of services like storage and warehousing for moving office goods, event management for organizing essential business activities, and cable operator services for staying updated with business news.

2. Application of the Formula for Calculating Eligible Refund Amount:

The second issue concerned the application of the formula in appendix 5 of Notification No. 5/2006. The adjudicating authority had reduced the total credit by the amount of credit utilized during the quarter and the amount of allegedly ineligible credit while calculating the refund. The appellant contended that this reduction was incorrect and that once credit is taken, it should not be disallowed during refund calculation.

The Tribunal supported the appellant's view, referencing a previous ruling where it was held that there cannot be two different yardsticks for permitting credit and granting refunds. The Tribunal stated that the formula should be applied without any deductions for credit utilized during the quarter or allegedly ineligible credit, as these credits were found to be eligible.

Conclusion:

The appeal was allowed, and the Tribunal directed the original authority to rework the eligible refund amount without the disputed deductions. The refund, along with interest, was to be sanctioned and disbursed within eight weeks from the receipt of the order.