2021 (3) TMI 420 - AT - Service Tax

Refund of CENVAT Credit - input services - Event Management Service - Real Estate Agency Service - Works Contract Service - period April to June 2017 - Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT - Both the authorities have taken a narrow interpretation of Input Service definition. In fact, as far as Real Estate Agency Service is concerned, the said service has been availed for identifying the office premises from where the software services can be exported by the appellant and without office premises, software services cannot be rendered hence the said service is directly related to the primary business requirement of the appellant and it has a direct nexus with the Output Service exported by the appellant - credit allowed. Works Contract Service - HELD THAT - Both the authorities have not appreciated the fact that the appellants have availed the services towards repair and maintenance of office premises which is essential for the provision of output services - credit allowed. Modernization, renovation, repair and maintenance of office premises - HELD THAT - This specifically included in the definition of Input Service under Rule 2(l) of CENVAT Credit Rules, 2004 - credit allowed. Real Estate Agency Service - HELD THAT - Issue decided in the case of M/S. PREM STEELS (P) LTD. VERSUS CCE, MEERUT-I 2009 (3) TMI 23 - CESTAT, NEW DELHI where it was held that activities of arranging sale thereof would cover the definition of Real Estate Agent - credit allowed.

Summary

Issues Involved: Refund claim rejection for Real Estate Agency Service and Works Contract Service.

Analysis:
The appeal was against the rejection of a refund claim by the Commissioner (Appeals) concerning two input services, Real Estate Agency Service, and Works Contract Service, due to a lack of nexus with the output services. The appellant, engaged in exporting Information Technology Software Service, filed a refund claim under Notification No.27/2012 for the period April to June 2017. The Assistant Commissioner initially sanctioned a partial refund but rejected a portion, including the Real Estate Agency Service and Works Contract Service credits. The appellant contended that the rejection was not sustainable as it failed to appreciate the definition of Input Service and the business requirements. The appellant argued that Real Estate Agency Service was crucial for identifying office premises essential for software service export, while Works Contract Service encompassed repair and maintenance of office premises, directly impacting output service provision.

The Counsel for the appellant argued that the rejection of the refund claim was based on a narrow interpretation of the Input Service definition. Real Estate Agency Service was deemed essential for identifying office premises crucial for software service export, directly linked to the primary business requirement. Similarly, Works Contract Service, covering repair and maintenance of office premises, was vital for output service provision and fell within the Input Service definition under CENVAT Credit Rules, 2004. The appellant cited relevant case laws to support their position.

After reviewing the submissions and evidence, the Judicial Member found that both authorities had narrowly interpreted the Input Service definition. Real Estate Agency Service was deemed crucial for identifying office premises essential for software service export, directly linked to the primary business requirement. Works Contract Service for repair and maintenance of office premises was also considered essential for output service provision and fell within the Input Service definition. Citing relevant case laws and the Input Service definition under CENVAT Credit Rules, 2004, the appeal was allowed, setting aside the impugned order and granting the appellant relief.