2012 (12) TMI 825 - AT - Service Tax

Business Auxiliary Services Export of service Refund claim for the service tax paid on input services - under Rule 5 of CENVAT Credit Rules, 2004 Held that - Input services received by the appellant and the nature of the services received, it is evident that all the services are essential in running the business of rendering the output service Business Auxiliary Service which is exported. Following the decision in case of Ultratech Cement Ltd., (2010 (10) TMI 13 - BOMBAY HIGH COURT) held that any service which has nexus with the business activity of the appellant, whether it is manufacturing or rendering service, has to be treated as input service coming within the purview of Rule 2(l) of the CENVAT Credit Rules, 2004. Therefore, appellant is rightly entitled for the refund of the service tax paid on input services which have been used in the rendering of output services has been exported. In favour of assessee

Summary

Issues:
Refund claim for service tax paid on input services under Rule 5 of CENVAT Credit Rules, 2004 rejected by lower authorities on grounds of lack of nexus between input and output services and absence of submitted invoices.

Analysis:
The appellant, engaged in providing Business Auxiliary Services to foreign customers, filed a refund claim for service tax paid on various input services, citing inability to utilize credit due to all output services being exported. The lower authorities rejected the claim based on the absence of a direct nexus between input and output services. The appellant argued that the input services, including office utilities, consultancy services, and advertisement services, are integral to their output service and should be eligible for credit. Citing precedent, the appellant contended that services essential to running the business should be treated as input services under CENVAT Credit Rules, 2004. The Tribunal agreed, referencing previous decisions that supported the broad interpretation of input services. The Tribunal held that all services essential to the output service, even if indirectly related, should be considered input services, entitling the appellant to a refund of service tax paid on such services used in exported output services.

Conclusion:
The Tribunal allowed the appeal, stating that all services essential to running the business and rendering the output service, even if indirectly related, should be considered input services under CENVAT Credit Rules, 2004. Citing precedent, the Tribunal held that the appellant was rightly entitled to a refund of service tax paid on input services used in exported output services.