2015 (6) TMI 661 - AT - Service Tax

Refund - Cenvat credit of input services used in exported output services - Held that - On perusal of the impugned order, I find that the first appellate authority has come to the correct conclusion as to that the respondents are eligible for CENVAT Credit of input services and also eligible for refund of the same as they have exported the services under the category of Business Auxiliary Services . The appellants have also contended that the case is fully covered by the clarification issued by the Circular 120/1/2010-ST dated 19.01.2010 towards para 3.3. The CBEC s Circular No. 120/01/2010-ST dated 19.01.2010 specifically provides that the essential services, used by Call Centres for provision of their output services would qualify as input services and be eligible for taking credit as well as refunds. Further, it was clarified in the said Circular that the phrase used in in the CENVAT Credit Rules and Notification should be interpreted in a harmonious manner. The inputs services, without which the quality and efficiency of output cannot be achieved, should be allowed as eligible input services for refund. Based on the above all the input services as referred in Para 11, which were disallowed by the adjudicating authority, are used by the applicant in providing the export outputs services and are very essential to provide quality output services . In the absence of any evidence controverting the factual findings of the first appellate authority; I find that the impugned order is correct and legal and does not suffer any infirmity. - Decided against the revenue.

Summary

Issues:
Refund claim eligibility based on input services nexus with exported services.

Analysis:
The appeal was filed against Order-in-Appeal No. 269 dated 16.07.2013, where the revenue challenged the setting aside of the order-in-original. The respondent, engaged in Business Auxiliary Services, claimed CENVAT Credit for service tax on input services used in providing exported output services. The adjudicating authority denied the refund claim, but the first appellate authority granted the refund. The revenue contended that the input services like 'Rent-a-Cab services', 'telephone services', and 'rent' lacked nexus with the exported services. However, the respondent argued that these services were essential for providing quality output services. The first appellate authority, citing Circular 120/1/2010-ST, held that input services crucial for achieving quality output should qualify for credit and refunds. The adjudicating authority's interpretation of 'input services used in providing output service' was deemed incorrect. The appellate authority's factual findings were not contested, and the impugned order was upheld, rejecting the revenue's appeal.

In conclusion, the judgment focused on the eligibility of the refund claim based on the nexus between input services and exported output services. The appellate authority's decision was supported by Circular 120/1/2010-ST, emphasizing the importance of essential input services for quality output. The interpretation of 'input services used for providing output services' was pivotal in determining the refund eligibility. The revenue's appeal was dismissed as it failed to challenge the factual findings supporting the refund claim. The judgment upheld the impugned order, affirming the respondent's entitlement to CENVAT Credit and refunds for input services used in exporting Business Auxiliary Services.