2019 (7) TMI 337 - AT - Service Tax

Refund of unutilized CENVAT Credit - input services - Club and Association Services - period October 2006 to September 2009 - Rule 5 of the Cenvat Credit Rule 2004 - HELD THAT - Commissioner had not disputed that the membership was not taken for business activities of the Appellant but he accepted the contention of the Appellant in Para 3(ii) of his order that respondent was required to get proper statistical data for proposed investment opportunities and the same can be gathered through participation in associating itself in any organisation/ business forum /trade association. The services in question were directly used by the service provider and credit was, therefore admissible. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Admissibility of Cenvat Credit on tax paid on "Club and Association Services" for refund.

Analysis:

Issue 1: Admissibility of Cenvat Credit on Club and Association Services
The Appellant sought a refund of unutilized Cenvat Credit under Rule 5 of the Cenvat Credit Rule 2004 for the period October 2006 to September 2009. The refund was refused by the Commissioner of Service Tax on the tax paid on Club and Association Services, while allowing the refund on Mandap Keeper Service. The Appellant contended that the credit was admissible, citing the wide scope of activities relating to business under Rule 2(l) of the Cenvat Credit Rule 2004. The Appellant argued that the Corporate Membership of Gymkhana Club was integrally connected to the investment Advisory Service provided. The Appellant relied on previous Tribunal decisions to support their claim.

Issue 2: Interpretation of Relevant Legal Precedents
The Appellant argued that the Commissioner erred in refusing the refund by misinterpreting the Telco Construction Equipment Co. Ltd. judgment. The Appellant distinguished their case from the Telco judgment by highlighting that the Corporate Membership was for the company, not individual employees. The Appellant emphasized that the membership facilitated the gathering of statistical data for investment opportunities, which was directly related to their business activities.

Issue 3: Judicial Analysis and Decision
After hearing both parties and examining the case record and legal submissions, the Tribunal observed that the services in question were directly used by the service provider, making the credit admissible. The Tribunal analyzed the Telco Construction Equipment Co. Ltd. judgment and noted that in the Appellant's case, the membership was not disputed to be unrelated to business activities. The Tribunal held that the Appellant's membership in the Gymkhana Club was for business purposes, allowing the credit on Club and Association Services. The Tribunal emphasized maintaining certainty and predictability in decision-making and upheld the eligibility of credit based on previous judicial precedents and the Appellant's own case.

Conclusion:
The Tribunal allowed the appeal, setting aside the Commissioner's order on the inadmissibility of Cenvat Credit on tax paid on Club and Association Services. The Tribunal directed the Respondent Department to release the refund of ?12,00,090/- with applicable interest within three months of the order.

(Order pronounced in the court on 05-07-2019)