2017 (5) TMI 1461 - AT - Service Tax

Refund claim - unutilised CENVAT credit - rejection of claim on the ground that amount attributable to medical policy taken for the employees is eligible for credit however the amount attributable to their family members is not admissible. In absence of documentary evidence with break up details the credit as a whole on this service was held to be not admissible - Held that - appellants have categorically declared that they are not recovering any such amount from the employees. The expenditure is borne by the appellants themselves. As such we find that the claim of the appellant on this credit is sustainable. An amount of 5, 89, 322/- was denied as credit and refund was rejected in respect of payments made for advertising service designing service and event management service - Held that - the appellants have arranged and availed these various services in connection with their business activities and considering the nature of their business and output service we hold that the credits are available on such services as they are connected to their business of rendering taxable output service. CENVAT credit - security services provided to clients - parking area for interview and event of the appellant - outdoor catering services - rent-a-cab expanses - Held that - Since the credit on various input services availed by the appellants were held to be eligible to them we find that the original authority has to examine that claim for due sanction in terms of the provisions under which the said claim was filed. The Original Authority directed to verify the claim filed by the appellant for sanction - appeal allowed by way of remand.

Summary

Issues:
Refund claim of unutilized cenvat credit amounting to ?2,25,08,012/- under Rule 5 of Cenvat Credit Rules read with Notification No.5/2006-CE (NT) dated 14.03.2006. Rejection of refund claim by the Original Authority. Appeal against the order of Commissioner (Appeals) allowing partial refund. Dispute regarding the eligibility of cenvat credit on various input services. Discrepancies in the application of the formula for computation of refund claim.

Analysis:
The appeal challenged the order of the Commissioner (Appeals) regarding the rejection of a refund claim of ?2,25,08,012/- by the Original Authority. The appellants, registered for providing taxable services, sought a refund of unutilized cenvat credit for services provided from October 2010 to December 2010. The Commissioner (Appeals) partially allowed the refund but rejected a significant amount. The appellant contended that the denied credits were essential for providing output services, supported by case laws and justifications for each service.

The main dispute involved the rejection of a claim amounting to ?67,49,156/-, particularly credits related to insurance payments for directors, employees, and their dependents. The impugned order disallowed the credit for family members of employees due to lack of documentary evidence. However, precedents established the eligibility of such credits, emphasizing that the expenditure borne by the appellants justified the claim. The Tribunal's decisions in similar cases supported the appellant's entitlement to the credits.

Another aspect concerned the denial of credit and refund for advertising, designing, and event management services. The appellant demonstrated the connection of these services to their business activities, citing a High Court ruling that expenses related to such activities fall within business operations, making the credits available. The Tribunal found these services integral to the appellant's business of rendering taxable output services.

Further, the denial of credits on security services, parking, catering, rent-a-cab, hospital services, air travel, maintenance, and repair expenses was unjustified. The Tribunal noted the direct connection of these services to the appellant's business activities, emphasizing their eligibility for input credit. The Tribunal directed the Original Authority to verify the claim for sanction in line with the observations made, including addressing any discrepancies in the calculation of the refund claim.

In conclusion, the appeal was allowed, and the Original Authority was directed to verify the appellant's claim for due sanction, considering the eligibility of various input services for cenvat credit as discussed in the judgment.