2016 (12) TMI 858 - AT - Service Tax

Denial of cenvat credit - input services - Financial Advisor to the appellant - denial on the ground that the services are not directly or indirectly related to manufacture - Held that - In any case, the definition of input service as contained in Rule 2(l) ibid, particularly, after its amendment w.e.f. 1.4.2011 contains two parts. The first part is an inclusive definition laying down examples of the type of input services that would fall within the ambit of eligible input services . The second part of the definition contains specific exclusions of services which cannot be considered as eligible input services for the purposes of Rule 2(l) ibid. The inclusive part of the definition therefore sets out only examples of input services which would fall in the genre of eligible input services . It also includes services used in relation to such activities . Financing finds a mention in the list of examples given in Rule 2(l). The type and nature of service provided by M/s.MAPE would definitely be services used in relation to financing and financial management of the appellant. This being the case, and considering that financial consultancy/advice is not disbarred otherwise in any of the exclusions in Rule 2(l) ibid, the eligibility of said input services should not be in question. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Disallowance of cenvat credit on services provided by M/s.MAPE Advisory Group (P) Ltd.
- Interpretation of the definition of "input services" under Rule 2(l) of the Cenvat Credit Rules, 2004.
- Eligibility of input services provided by M/s.MAPE for the purpose of Rule 2(l) ibid.
- Appeal against the decision of the Commissioner (Appeals) regarding the disallowance of cenvat credit.

Analysis:
The dispute in this case revolves around the disallowance of cenvat credit on services provided by M/s.MAPE Advisory Group (P) Ltd., acting as a Financial Advisor to the appellant. The Department contended that the services provided were not directly or indirectly related to the manufacture of the final products, hence not falling under the definition of "input services" as per Rule 2(l) of the Cenvat Credit Rules, 2004. Consequently, proceedings were initiated against the appellant, proposing recovery of service tax liability and imposition of penalties. The original authority and the Commissioner (Appeals) upheld these proposals, leading to the appeal before the forum.

During the hearing, the appellant's advocate highlighted that the services provided by M/s.MAPE were Financial Advisory Services, particularly regarding the disinvestment of shares in specific companies. The appellant had acted upon this advice, resulting in disinvestment proceeds being utilized as working capital for manufacturing operations, as certified by an Auditor's Certificate. The advocate argued that the input services availed were eligible under the law.

On the other hand, the Department's representative reiterated the correctness of the impugned order, emphasizing that the services provided by M/s.MAPE did not align with the examples given in Rule 2(l) and were not directly or indirectly related to the manufacture of final products.

After considering both arguments and examining the facts, the Tribunal found that the services obtained from M/s.MAPE were indeed in the nature of Financial Advice for disinvestment purposes, with the proceeds being utilized for manufacturing operations. The Tribunal noted that the definition of "input service" under Rule 2(l) includes examples of eligible services used in relation to activities, such as financing. Since financial consultancy/advice was not excluded in the rule, the Tribunal concluded that the disputed services availed by the appellant were eligible "input services" under Rule 2(l). Consequently, the appeal was allowed, granting the appellant relief as per the law.

In conclusion, the Tribunal's decision centered on the eligibility of the input services provided by M/s.MAPE, ultimately allowing the appeal and providing consequential relief to the appellant in accordance with the law.