2016 (1) TMI 1362 - AT - Service Tax

100% EOU - Refund of CENVAT credit - outdoor catering services - medical insurance services of employees - denial on account of nexus - Held that - It has to be mentioned that the dispute related to the period April 2010 to June, 2010 during which time the definition of input services was very wide and included any activities relating to business - In a catena of judgments, it is held the credit is available on insurance services and outdoor catering services prior to 01-04-2011 - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Denial of refund for service tax paid on outdoor catering services and medical insurance services of employees by the Commissioner (Appeals).

Analysis:
1. The appellants, a 100% EOU engaged in manufacturing bulk drugs and exporting services, sought a refund of unutilized Cenvat Credit on input services, including outdoor catering and medical insurance services. The original authority partially granted the refund but rejected the claim for outdoor catering and medical insurance services. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

2. The AR for the Respondent contested the refund claim specifically regarding medical insurance services for employees, arguing that there was no evidence to prove that contributions were not recovered from the employees. The consultant for the Appellant refuted this claim, stating that no contributions were collected from employees for outdoor catering or medical insurance services. The Commissioner (Appeals) rejected the refund, stating that these services did not have a direct nexus with providing output service. However, during the period in question (April 2010 to June 2010), input services were broadly defined to include any activities related to business. Previous judgments and a tribunal order in the appellant's case for a different period supported the availability of credit for insurance and outdoor catering services pre-01-04-2011.

3. The presiding judge, Ms. Sulekha Beevi, reviewed the arguments and determined that the rejection of the refund was unjustified. Consequently, the impugned order denying the refund for outdoor catering and insurance services was set aside, and the appeal was allowed with any necessary consequential reliefs.

4. The judgment by the Appellate Tribunal CESTAT HYDERABAD in this case highlights the importance of establishing a direct nexus between input services and output services when claiming refunds. It also emphasizes the significance of considering the prevailing definitions and precedents while making such determinations. The decision ultimately favored the appellant, granting the refund for outdoor catering and medical insurance services.