2018 (9) TMI 1382 - AT - Service Tax

Refund of unutilized CENVAT Credit - export of services - Input services - catering service - denial of refund on the ground of nexus of the service with the output service - Held that - The fact is not on dispute that the appellant had availed the services of the caterer for providing the catering facility to its employees, working within its business premises. Since providing catering facilities to the employees within the business premises is as per the Human Resource Policy, adopted by the appellant, the service tax paid on such service, should be considered as input service for the purpose of availment of refund benefit. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of service tax on input services - Catering service and rent-a-cab service.

Analysis:
The case involves appeals against an order passed by the Commissioner denying service tax refund on certain input services used by the appellant in providing export services. The appellant, engaged in Information Technology Services, exported its entire output service to overseas clients and claimed refund of service tax paid on input services. The Commissioner denied refund on catering service and rent-a-cab service, stating they were used for personal consumption of employees and lacked nexus with the output service.

The appellant contended that catering service was utilized as per the company's HR policy and had a nexus with the output service. The appellant argued that under the unamended Rule 2(l) of the Cenvat Credit Rules, 2004, activities relating to business were considered as input services, making them eligible for refund. The Revenue, however, supported the Commissioner's findings.

The Tribunal noted that the appellant did not contest the denial of refund on rent-a-cab service and upheld the Commissioner's decision on this aspect. Regarding catering service, the Tribunal found that it was availed for employees within the business premises as per the HR policy, making it an input service for business activities. Since the service was used to accomplish business activities, the Tribunal set aside the Commissioner's decision and allowed the appeals.

In conclusion, the Tribunal held that the appellant was entitled to a refund of service tax paid on catering service as it qualified as an input service under the unamended definition. The appeals were disposed of accordingly.