2016 (11) TMI 649 - AT - Service Tax

Export of services - Business Auxiliary Service - input services - time bar - deployment of staff - Held that - as the appellant has several employees and the availability of same in good health for rendering the output service, is essential for carrying on their business or providing output service as a BPO. In this nature, of activity the employees form the backbone of the organization for providing the service. Accordingly, it is essential for the appellant/assessee to ensure the availability of their personnel for providing service. Accordingly, to ensure that their personnel and staff are in good health for providing the output services, the appellant having used the services of doctors and nurses which may not be available otherwise at odd hours and may effect the performance of output services by their staff. Accordingly, I hold that such services received by the appellant is an essential input service for providing their output services as a BPO which is a taxable service. Further, there is no dispute by Revenue that the service tax have not been charged and not paid on the same. Cleaning service - Held that - I hold that the same is an essential service for any business organization including that of the appellant. Clean office premises is definitely required for efficient working and to ensure good health of the management and staff of the organization. Accordingly, I hold the cleaning services are eligible input service for providing output service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal barred by limitation
2. Eligibility of Cenvat credit for medical services
3. Eligibility of Cenvat credit for cleaning services

Analysis:
1. The appellant, a BPO and exporter of services under 'Business Auxiliary Service,' appealed against an Order-in-Appeal dated 19-02-2014. The Revenue contended that the appeal was time-barred as the order was dispatched via speed post on 23-04-2014, with a presumption of service within one month. The appellant claimed they only learned of the order on 30-03-2015, after a notice for payment was received on 21-02-2015. The Tribunal found the appellant's contention reliable due to the correspondence, waived the objection, and proceeded with the appeal.

2. The dispute revolved around services received from a registered entity for providing medical services to the appellant's employees, ensuring availability round the clock. The service provider deployed qualified nurses, maintained records, and provided immediate medical care. The Commissioner disallowed Cenvat credit, deeming the service non-taxable. The Tribunal held that ensuring employee health for service provision was crucial for the BPO's operations, making medical services an essential input service eligible for Cenvat credit, despite no service tax being charged or paid.

3. Regarding cleaning services, the Tribunal deemed them essential for any business organization, including the appellant, to maintain clean premises for efficient operations and staff health. Consequently, cleaning services were considered eligible input services for providing output services. The impugned order was set aside, the appeal was allowed, and penalties were also overturned, granting consequential benefits to the appellant.

This judgment clarified the eligibility of Cenvat credit for medical and cleaning services, emphasizing the importance of essential input services for BPO operations and business efficiency.