2019 (10) TMI 49 - AT - Service Tax

Refund of CENVAT Credit - input services used for export of output service - membership fees - insurance service - Krishi Kalyan Cess - Rule 5 of CCR - HELD THAT - The appellant has availed the services for obtaining membership in NASSCOM. It is established from the argument as well as the facts that the appellant is required to take membership in such trade association so that it could help them to keep updated with the changed in the market - The Tribunal in the case of NORTHERN OPERATING SERVICE PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I 2017 (11) TMI 1105 - CESTAT BANGALORE has allowed credit in respect of membership fees - the rejection of refund cannot sustain. Rejection of refund claim in respect of insurance services - HELD THAT - The said services are availed by the appellant for meeting the loss that may result on account of any wrong decisions taken by the top most officers. This indemnification would help the appellant-company in cases of wrong decisions or wrong acts by the persons in the capacity as Directors and officers - the rejection of refund is unjustified and the same requires to be set aside. Rejection of refund of Krishi Kalyan Cess - it was held that the appellant has not debited in ST-3 returns - HELD THAT - On perusal of the returns, it is seen that the appellant has in fact debited the amount for the said period. The rejection is wrong on facts - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of refund claim for membership fee
2. Rejection of refund claim for insurance services
3. Rejection of refund claim for Krishi Kalyan Cess

Analysis:
1. The appellant filed a Rule 5 refund claim for credit availed on input services used for exporting output services. The original authority rejected the claim for certain services. The Commissioner (Appeals) allowed credit for input services except for membership fees, insurance services, and Krishi Kalyan Cess. The appellant appealed the decision. The consultant argued that membership fee to NASSCOM was necessary for market awareness and legal compliance. Citing a precedent, the Tribunal allowed credit for membership fees, overturning the rejection.

2. The rejection of refund claim for insurance services was based on policies covering directors and officers' liability. The consultant argued that such policies indemnify against losses due to wrong decisions. Referring to a relevant case, the Tribunal found the rejection unjustified and set it aside, allowing the refund for insurance services.

3. The rejection of refund claim for Krishi Kalyan Cess was due to alleged non-debiting in ST-3 returns. The consultant presented evidence showing the appellant had debited the amount. Upon verification, the Tribunal found the rejection erroneous and set it aside. Consequently, the impugned order was overturned for all three issues, granting the appeals with any consequential relief.