2018 (4) TMI 299 - AT - Service Tax

Refund claim - various input services - denial on account of nexus - Held that - all the input services on which refund has been denied have been held to be input services by various decisions of the Tribunal and the High Court - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on nexus of input services with exported services.

Analysis:
The appellant filed two appeals against the Commissioner(Appeals)'s order rejecting refund on certain input services due to lack of nexus. The appeals involved refund claims for different periods with similar input services. The original authority rejected the refund claims citing various grounds, including the ineligibility of certain input services. The Commissioner(Appeals) partially allowed the appeals, holding that some input services had a nexus with the exported services. The appellant challenged this decision, arguing that the order exceeded the scope of the original authority's decision by denying credit on additional services. The appellant cited legal precedents to support their claim, emphasizing that the denied input services had been recognized as eligible in prior decisions by the Tribunal and High Court in similar cases.

The appellant's counsel contended that the impugned order did not consider binding judicial precedents and went beyond the original authority's scope by denying credit on services beyond catering and insurance. The counsel highlighted that in a previous case of the appellant, credit on the same denied services had been allowed by the appellate authority. The counsel presented a table listing the input services and corresponding legal decisions recognizing them as eligible input services. The appellant argued that even after the amendment in the definition of input services, the denied services had been upheld as eligible in various cases, including a Division Bench ruling post-amendment.

On the other hand, the Respondent's representative supported the impugned order's findings, stating that certain services were excluded from the definition of input services post-amendment as they were deemed unnecessary for rendering output services. The Respondent argued that the appellant failed to provide sufficient evidence to prove the necessity of the denied services for output service provision. The Commissioner(Appeals) rejected the refunds for these services based on their exclusion from the updated definition. In response, the appellant's counsel referenced the Reliance Industries Ltd. case where the excluded services were still considered input services post-amendment. The counsel emphasized that the denied services were utilized for output service provision and compliance with statutory obligations, not for personal use.

Ultimately, the Tribunal found the impugned order unsustainable in law based on the legal precedents cited by the appellant. The Tribunal set aside the order, allowing the appeals of the appellant. The decision was pronounced on 18-01-2018.