2017 (3) TMI 618 - AT - Service Tax

Refund claim - CENVAT credit - export of output services - various input services - Held that - The Tribunal in the appellant s own case 2016 (6) TMI 679 - CESTAT HYDERABAD has discussed and analyzed the eligibility of credit in respect of all most all services - rejection of refund unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility of CENVAT credit/refund for various input services used by the appellant.
2. Specific rejection of refund claims for fixed asset insurance, inward transportation of headsets, and Information Technology Software Service (ITSS).

Issue-wise Detailed Analysis:

1. Eligibility of CENVAT credit/refund for various input services:

The appellants, engaged in Business Processing Outsourcing (BPO) / call center services, filed refund claims for accumulated CENVAT credit on input services due to the export of their output services. The authorities rejected part of these claims. The services for which refunds were rejected include Manpower Recruitment Services, Security Agency Charges, Internet Telecommunication Services, CA/Legal Services, Housekeeping/Cleaning/Pest Control, AMC for Xerox/Printing Machine, UPS Maintenance Charges, Common Area Maintenance, Installation of Access Control Systems, Fixed Asset Insurance, and Inward Transportation of Headsets.

The appellant argued that these services are essential for their business operations and are covered under the definition of input services. They cited previous judgments in their own case (M/s. Knoah Solutions Pvt. Ltd. v. CC, CE & ST, Hyd-IV [2016-TIOL-1592-CESTAT-HYD]) where similar claims were held eligible. The Tribunal, in this case, had analyzed and accepted the eligibility of credit for most of these services.

2. Specific rejection of refund claims:

a. Fixed Asset Insurance:
The appellant contended that the insurance of capital assets is crucial for their business operations and should be considered an input service. The Tribunal found this argument acceptable and held that the rejection of the refund for this service was unjustified.

b. Inward Transportation of Headsets:
The appellant argued that the headsets are essential inputs for their BPO activities, as they are used by employees to attend calls. The Tribunal agreed, stating that the rejection of the refund for this service was baseless, as inward transportation of inputs is specifically included in the definition of input services.

c. Information Technology Software Service (ITSS):
The appellant received ITSS from their parent entity abroad to customize software for a domestic customer and paid service tax under the reverse charge mechanism. They argued that these services are input services for providing their output services. The Tribunal found that the rejection of the refund for ITSS was unjustified, as the service tax was duly paid, and the services were essential for their business operations.

Conclusion:
The Tribunal concluded that the rejection of the refund claims for the mentioned services was unjustified. The impugned order was set aside to the extent of rejecting the refund claims, and the appeals were allowed with consequential reliefs, if any. The judgment emphasized the necessity of these services for the appellant's business operations and their inclusion under the definition of input services.