2017 (5) TMI 1300 - AT - Service Tax

CENVAT credit - scope of input service - content development services - business promotion and marketing services including business support services - Held that - the period involved is prior to 01/04/2011. The definition of input services during the period had wide ambit as it included the words activities relating to business. The credit is eligible on the said services if the same are used for providing output services - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit on input services

1. Business Support Services:
The appellant contended that charges for business support services, like data purchase, are integral to providing content development services to customers and thus eligible for credit. The tribunal acknowledged that input services essential for rendering output services should be eligible for credit.

2. Information Technology Software Services:
The appellant argued that IT software services are directly related to exporting output services and thus eligible for cenvat credit. The tribunal agreed that services directly linked to output services should qualify for credit.

3. Renting of Immovable Property Services:
The appellant justified fit-out rentals as essential for the business premises where output services are rendered, making them eligible for credit. The tribunal noted that services directly related to output services, like renting premises, should be creditable.

4. Courier Services:
The appellant stated that courier services are crucial for sending documents to customers or vendors, integral to the business, and eligible for credit. The tribunal agreed that services essential for business operations should be creditable.

5. Telecommunication Services/ Internet Telecommunication Services:
The appellant argued that telephone/mobile facilities are vital for communication with customers and vendors, essential for business functioning, and thus eligible for credit. The tribunal concurred that services necessary for business operations should qualify for credit.

6. Supply of Tangible Goods services:
The charges for hiring Audio Visual Equipment were deemed directly related to rendering output services, making them eligible for cenvat credit according to the appellant. The tribunal agreed that services directly linked to output services should be creditable.

7. Rent-a-Cab Scheme Operator s Services:
The appellant justified these services for providing transportation to employees as essential for output services, citing relevant circulars. The tribunal agreed that services crucial for business operations should be eligible for credit.

8. Air Travel Agent Services:
The appellant argued that booking air tickets for employees is necessary for client visits and business meetings, essential for effective work execution and training. The tribunal acknowledged that services required for business activities should be creditable.

9. Management or Business Consultant s Services:
The appellant highlighted the importance of these services for accounting, payroll, tax compliance, and operational efficiency. The tribunal agreed that services essential for business operations should qualify for credit.

10. Management, Maintenance or Repair Services:
The appellant justified these services for maintaining a hygienic work environment essential for efficient operations. The tribunal concurred that services crucial for business functioning should be eligible for credit.

11. Security Agency Services:
The appellant argued that security services are essential for office, employee, and data security, crucial for output services and thus eligible for credit. The tribunal agreed that services necessary for business operations should be creditable.

12. Insurance Services:
The appellant stated that insurance services are crucial for indemnification in case of accidents, supporting operational efficiency and employee commitment. The tribunal acknowledged that services directly contributing to output services should qualify for credit.

13. Manpower Recruitment or Supply Agency Services:
The appellant justified these services for employee recruitment and supply of IT professionals as covered under input services, essential for business activities. The tribunal agreed that services vital for business operations should be eligible for credit.

In conclusion, the tribunal found the disallowance of credit on input services unjustified and set aside the impugned order, allowing the appeal with consequential reliefs.