2015 (10) TMI 232 - AT - Service Tax

Denial of refund claim - export of services - eligible input services - nexus with output services - Notification No. 5/06 CE (NT) dated 14.3.2006 - Held that - Services which are clearly covered by the inclusive part of the definition of input service which provide for CENVAT credit of service tax paid on input services used by the manufacturer in relation to setting up, modernization, renovation or repairs of a factory, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business such as accounting, audit, financing, recruitment, quality control, coaching and training, computer net-working, credit rating, share registry, security etc. Since in my opinion, all the services are covered by the definition of input services, the appellant is eligible for the refund claimed by them. - Decided against Revenue.

Summary

Issues:
1. Eligibility of refund for service tax paid on input services under Notification No. 5/06 CE (NT) dated 14.3.2006.
2. Nexus requirement between input services and manufacture of final product.
3. Interpretation of the inclusive part of the definition of input services.
4. Applicability of relevant legal precedents in determining eligibility for refund.

Analysis:
1. The appeal pertains to the eligibility of refund for service tax paid on various input services like banking, financial services, courier service, etc., under Notification No. 5/06 CE (NT) dated 14.3.2006. The Revenue challenged the refund allowed by the learned Commissioner (Appeals) for these services.

2. The Revenue contended that there must be a nexus between the input services and the manufacture of the final product, citing the decision of the Hon'ble Supreme Court in the case of Maruthi Suzuki Ltd. The Revenue argued that such nexus was lacking in this case, emphasizing the importance of the connection between input services and the final product.

3. The Tribunal examined the definitions of services under the inclusive part of the input services, which encompassed various activities like setting up a factory, market research, accounting, etc. The Tribunal found that all the services in question fell within the definition of input services, making the appellant eligible for the refund claimed. This interpretation was crucial in determining the scope of services eligible for refund under the relevant notification.

4. In analyzing the legal precedents, the Tribunal distinguished the case of Maruthi Suzuki Ltd., where the issue was related to CENVAT credit for inputs and input services, from the present case concerning the eligibility of refund for service tax paid on input services. The Tribunal also referenced decisions such as ABB Ltd. and Jeans Knit Pvt Ltd., where the eligibility for credit was upheld, supporting the appellant's claim for refund in this case.

Therefore, based on the comprehensive analysis of the nexus requirement, interpretation of the inclusive part of the definition of input services, and the application of relevant legal precedents, the Tribunal rejected the appeal filed by the Revenue, affirming the eligibility of the appellant for the refund claimed on the input services.