2021 (4) TMI 863 - AT - Service Tax

Refund of unutilized CENVAT credit of Service Tax - Input service - General Insurance Service - Club Membership Service - Photography Service - Credit Card and Debit Card Services - rejection on the ground of lack of nexus of the input service with the output service exported - exclusion of input service from the definition of Input Service under Rule 2(l) of CCR 2004 - HELD THAT - The learned Counsel appearing for the appellant has given full justification that the said services have been used for providing the output service and I also find that the services viz. Architectural Service, Event Management Service, Works Contract Service, Supply of Tangible Goods Service, has been specifically held to be input service by various decisions rendered by the Tribunal and the High Court. General Insurance Service - HELD THAT - The appellant has not been able to bifurcate the Insurance Service availed on the assets of the company and on the lives of the persons working in the said company. In the absence of clear bifurcation and lack of documentary evidence, the CENVAT credit on General Insurance Services is denied - credit denied. Club Membership Service - HELD THAT - The learned Commissioner, though, has admitted that the said services is in relation to applying for the membership of the trade and association but still hold the same is for the benefit of the employees only. This finding of the learned Commissioner is wrong because the membership of the club was used in relation to promoting the trade and hence it falls within the definition of Input Service - credit allowed. Photography Service - HELD THAT - The Photography Services were availed by the appellant for capturing the business events which are necessary to keep record of the events conducted as well as for future reference hence this service also falls within the definition of Input Service - credit allowed. Credit Card and Debit Card Services - HELD THAT - These services were used for booking official travels, meal cards and accommodation for the appellant s employees who had to travel within or outside India on official projects which directly contributes to the business operation and has a direct nexus to the output service - the said service also falls within the definition of Input Service - credit allowed. Appeal allowed in part.

Summary

Issues Involved:
1. Rejection of CENVAT credit on various input services.
2. Nexus between input services and output services.
3. Exclusion of certain services from the definition of Input Service under Rule 2(l) of CCR 2004.

Issue-Wise Detailed Analysis:

1. Rejection of CENVAT Credit on Various Input Services:
The appellants filed refund claims for unutilized CENVAT credit of Service Tax paid on input services used for providing exported output services. The Original Authority sanctioned part of the refund but rejected CENVAT credit on certain input services. The Commissioner (Appeals) upheld the rejection for some services but allowed it for others. The appellants contested the rejection before the Tribunal.

2. Nexus Between Input Services and Output Services:
The appellants argued that all input services for which refund was rejected were essential for providing the output services, citing various Tribunal and High Court decisions. For instance:
- Architectural Services: Used for designing office premises from where output services were rendered. Supported by decisions in *Mentor Graphics India Pvt. Ltd.* and *Arm Embedded Technologies Pvt. Ltd.*
- Event Management Services: Used for business events and conferences essential for business operations. Supported by decisions in *DBOI Global Services Pvt. Ltd.*, *Delphi Automotive Systems Pvt. Ltd.*, *ICICI Prudential Asset Management Co. Ltd.*, and others.
- General Insurance Services: Taken for safeguarding assets, buildings, and employees’ health. Supported by decisions in *Anglo French Drugs & Industries Ltd.* and *DBOI Global Services Pvt. Ltd.*
- Works Contract Services: Used for repairs and maintenance of equipment and premises. Supported by decisions in *Red Hat India Pvt. Ltd.* and *Alliance Global Services IT India*.
- Supply of Tangible Goods: Used for hiring equipment for business events and meetings.
- Membership of Club: Used for applying for membership of trade associations and bodies.
- Credit Card, Debit Card & Other Payment Card Services: Used for booking official travels and accommodations for employees on official projects.
- Photography Services: Used for capturing business events necessary for record-keeping and future reference.

3. Exclusion of Certain Services from the Definition of Input Service:
The Commissioner rejected CENVAT credit on the ground that certain services were excluded from the definition of Input Service under Rule 2(l) of CCR 2004. The Tribunal analyzed the definition and found that:
- Architectural Services, Event Management Services, Works Contract Services, and Supply of Tangible Goods Services were specifically held to be input services by various judicial decisions.
- General Insurance Services in Appeal No. ST/20027/2020 were denied due to lack of bifurcation between insurance on assets and employees.
- Club Membership Services were wrongly excluded by the Commissioner as they were used for promoting trade.
- Photography Services were necessary for business events and hence qualified as input services.
- Credit Card and Debit Card Services were used for official purposes and had a direct nexus to the output services.

Conclusion:
The Tribunal concluded that except for General Insurance Services in Appeal No. ST/20027/2020, all other input services qualified as Input Services under Rule 2(l) of CCR 2004. The appellants were entitled to CENVAT credit and consequently the refund of the said amount under Notification No. 27/2017CE dated 18.06.2017 read with Rule 5 of the CCR 2004. All appeals were disposed of accordingly.