2015 (11) TMI 653 - AT - Service Tax

Cenvat Credit - input services - nexus with output / export of services - Commissioner disallowed a portion of the credit available on the ground that Service Tax credit in respect of terrace area and parking space in respect of rented immovable property is not admissible - Benefit of refund under Notification No. 5/2006-C.E. (N.T.) read with Rule 5 of Cenvat Credit Rules 2004 - Held that - all the services are covered by the definition of input service and there is nexus between the output service and the input services. Further it was also submitted that in the show cause notice one of the grounds taken was that according to Notification No. 5/2006-C.E. (N.T.) as it existed during the relevant time Revenue is of the view that Cenvat credit use in providing output service was only admissible and therefore the credit can be allowed only when the use is in providing output service which a far more restricted term than the used term for . - This removed distinction between the provisions of Cenvat Credit Rules which provide for use of input service for providing output service and the notification which used the words used in . I find this submission to be appropriate for considering the admissibility of Cenvat credit and refund thereof in respect of these services. - Decided in favour of assessee.

Summary

Issues:
Appeal against benefit of refund under Notification No. 5/2006-C.E. (N.T.) and Rule 5 of Cenvat Credit Rules, 2004. Disallowance of credit on terrace area and parking space in rented immovable property. Nexus between output service and input services for various service categories. Interpretation of Notification No. 5/2006-C.E. (N.T.) regarding Cenvat credit use.

Analysis:
The Revenue appealed against an order allowing refund benefits under Notification No. 5/2006-C.E. (N.T.) and Rule 5 of Cenvat Credit Rules, 2004. The Commissioner disallowed a portion of the credit related to terrace area and parking space in rented immovable property. The appellant claimed that Service Tax benefit should apply to these areas. The Counsel cited precedents to support their argument, including the decision in CST v. Mercedes Benz Research & Development India (P) Ltd. and mPortal India Wireless Solutions P. Ltd. v. CST. These decisions established that terrace and parking areas should not be excluded when calculating credit for renting immovable property services. The Revenue also contested the nexus between output and input services for various categories, but the respondent provided detailed justifications for each service category, demonstrating the nexus effectively.

The Tribunal found that all services in question fell within the definition of input services and had a clear nexus with the output services. Additionally, the appellant highlighted an important amendment to Notification No. 5/2006, which changed the language from "used in" to "used for," removing the distinction between Cenvat Credit Rules and the notification. This change had implications for the admissibility of Cenvat credit and refunds related to the services in question. Consequently, the Tribunal rejected the Revenue's appeal, upheld the appellant's cross-objections, and allowed the balance credit disallowed by the Commissioner, granting the appellant the full refund amount claimed. The appeals were decided in favor of the respondents based on the presented arguments and legal interpretations.