2017 (8) TMI 1053 - AT - Service Tax

100% EOU - Refund claim - export of services - Renting of Immovable Property - Management Consultancy - Manpower supply - Information Technology (Software) service - Commercial Training and Coaching - Technical Inspection & Certification - Convention services - Held that - there is no dispute about the fact that service tax stands paid by the appellant in respect of services availed by them from their Director, in her individual capacity, under the category of Renting of Immovable Property service. In such a scenario, the stand of the Revenue that they were under no legal obligation to discharge service tax cannot be appreciated. Refund on Information Technology services - denied on the ground that the same were used for preparation of conveyance allowance chart of the employees and not in connection with the output service - Held that - As per the appellant they updated and installed new software only for the efficient working and to improve the administrative efficiency. In that process the upgradation of pay roll of the employees is an effort for the better provision of output service. The Board s Circular dated 19.01.2010 was observed that whatever service improves the quality of output service, the same has to be held as availed in connection with the output service - there is no justifiable reason to deny credit. Refund on delegate fees paid by the appellant to various service providers for training of their employees - Held that - The Tribunal in their decision vide Final Order no. 41497 to 41525/16 dated 07.09.2016, for the same appellant has held the said service to be cenvatable input service - credit allowed - Similarly an amount of ₹ 1,598/- which stands made as delegate fee/registration fee to various organizations for receiving, training and improving the skills of the employees would be eligible for the purpose of Cenvat credit and consequent refund. Refund claim - Management Consultancy Services - Manpower Recruitment Services - Technical Inspection and Certification Services - denial on the ground that the same cannot be held to be cenvatable input services - Held that - all the said services are connected with the business of the appellant and have to be held as having been used in relation to their business - refund allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for input services used in exporting output service; Rejection of refund amount by Department; Commissioner (Appeals) decision on various services; Denial of refund for renting of immovable property service; Dispute over service tax payment by Director; Denial of refund for Information Technology services; Denial of refund for delegate fees paid for employee training; Denial of refund for Management Consultancy, Manpower Recruitment, and Technical Inspection services.

Analysis:
The appellant, a 100% EOU providing e-publishing services, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 for input services used in exporting output services. The Department sanctioned a partial refund and rejected a balance amount, including Cenvat credit on various services. The Commissioner (Appeals) allowed some services but rejected others, leading to the present appeal.

The first issue concerns the denial of refund for renting of immovable property service. The lower authorities rejected a refund claimed under this category, stating the service was provided by the Director individually, not in her role for the company. However, the appellant had paid service tax under a mistake of law, which should be refunded. The Tribunal found the denial unjustified as the service was used for business activities.

Regarding Information Technology services, a part of the refund was denied as the services were allegedly used for employee conveyance allowance charts, not connected to output services. The appellant argued the software upgrades aimed at improving administrative efficiency, indirectly benefiting output services. The Tribunal, referencing a Board's Circular, held in favor of the appellant, stating any service improving output quality should be considered connected.

Another issue involved delegate fees for employee training, denied as non-cenvatable input services. However, the Tribunal, citing a previous decision, deemed such services eligible for Cenvat credit and refund. Similarly, fees paid for employee skills improvement were also considered eligible for credit and refund.

Lastly, refund denial for Management Consultancy, Manpower Recruitment, and Technical Inspection services was challenged. The Tribunal found these services connected to the appellant's business activities, citing previous Tribunal decisions. Consequently, the denial of refund for these services was deemed unjustified.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.