2016 (12) TMI 540 - AT - Service Tax

Rejection of refund claim - credit availed on service tax paid on various input services used for export of IT Software Service - Rule 5 of Cenvat Credit Rules, 2004, r/w Notification No.5/2006, dated 14-03-2006 - Held that - The period involved in both the appeals is prior to 01-04-2011, when the definition of input service had wide ambit, as it included the words activities relating to business . In the decisions of KPMG Vs CCE, New Delhi 2013 (4) TMI 493 - CESTAT NEW DELHI , the Tribunal has held the input services are eligible for credit. Appeal disposed off - refund partly allowed - matter on remand.

Summary

Issues:
Appeal against rejection of refund claim for unutilized Cenvat credit of input services availed by the appellant.

Analysis:
The appellant filed refund claims for two periods, January 2010 to March 2010 and April 2010 to June 2010, for service tax paid on various input services used for exporting IT Software Service. The appellant listed various services and amounts rejected, including renting of immovable property, cab scheme operators service, cleaning activity services, outdoor catering services, telecommunication services, and more.

The appellant's consultant argued that certain amounts were rejected due to lack of nexus between input and output services, absence of produced invoices, and adjustments made for advance payments. The consultant requested a remand for further examination to establish eligibility for refund. The department reiterated the findings in the impugned order.

The issue of eligibility for credit of the subject services was discussed, citing various judgments where similar services were deemed eligible for credit. The definition of input service before April 2011 had a broad scope, including "activities relating to business." Previous tribunal decisions and the appellant's own case supported the eligibility of most services for credit, except general insurance services. The appellant's challenge was limited to an amount of ?1,67,985, excluding ?8,669 remanded for discrepancies in invoices.

Based on the cited decisions, the tribunal partly allowed one appeal, holding the appellant eligible for a refund of ?2,04,619, and remanded the issue of ?12,360 and ?56,183 to the Original Authority. The second appeal was allowed, affirming the appellant's eligibility for a refund.

In conclusion, the tribunal's decision was based on the eligibility of input services for credit, previous judgments, and specific arguments presented by the appellant's consultant. The tribunal partially allowed one appeal and fully allowed the second appeal, directing a refund for the appellant.