2016 (6) TMI 680 - AT - Service Tax

Refund - Export of software services by 100% EOU - eligibility of various input services - From January 2012 to March 2012 - Held that - the disputed input services as aforesaid, disallowed by the lower authorities, will merit consideration as input services for the purposes of Rule 2(l) of the CENVAT Credit Rules 2004, as amended w.e.f. 01/04/2011 and that these services have clear nexus with the output service provided by the appellant and are very much used by them to provide the output service. - Decided in favor of assessee.

Summary

Issues Involved:
1. Denial of refund of service tax paid on input services.
2. Eligibility of various input services for CENVAT credit.

Issue-wise Detailed Analysis:

1. Air Travel Agent’s Services:
The lower authority disallowed the refund on the grounds of insufficient evidence proving the services were for official purposes. The appellant provided sample invoices and internal approvals demonstrating the services were strictly for business purposes. The Tribunal held that the denial of the refund was not justifiable.

2. Banking and Other Financial Services:
Refund was denied due to lack of connectivity with export services. The appellant argued these services were used to provide foreign currency to employees on overseas tours, directly related to export services. The Tribunal found the denial of the refund unjustifiable.

3. Chartered Accountant’s Services:
The refund was disallowed due to no established connectivity with export services. The appellant argued these services were related to auditing and certification, falling under the inclusive portion of input services. The Tribunal held the denial was not justifiable.

4. Commercial Training or Coaching Services:
Refund was partially disallowed for training on communication skills and conferences. The appellant argued these were business-related training services. The Tribunal found the denial unjustifiable.

5. Courier Services:
Refund was disallowed due to lack of evidence of business usage. The appellant argued the services were used to send business documents to customers/vendors. The Tribunal held that courier services are necessary for business operations, making the denial unjustifiable.

6. Custom House Agent’s Services:
Refund was denied due to unclear purpose and relation to export services. The appellant argued these services were used for importing IT equipment. The Tribunal found the denial unjustifiable as the services were related to business activities.

7. Information Technology Software Services:
Refund was disallowed without reasons. The appellant argued the services were related to web-based application hosting charges. The Tribunal held the denial unjustifiable.

8. Management, Maintenance and Repair Services:
Refund was denied for services not impacting the quality of output services. The appellant argued these services were essential for day-to-day office functions. The Tribunal found the denial unjustifiable.

9. Management or Business Consultant’s Services:
Refund was partially disallowed for statutory compliance and payroll processing fees. The appellant argued these services were necessary for accounting, payroll, tax, and regulatory compliance. The Tribunal held the denial unjustifiable.

10. Manpower Recruitment or Supply Agency’s Services:
Refund was disallowed without reasons. The appellant argued these services were for supplying qualified IT professionals necessary for exporting services. The Tribunal found the denial unjustifiable.

11. Renting of Immovable Property Services:
Refund was partially disallowed for rent of fitouts, deemed not part of immovable property services. The appellant argued fitouts were essential for business operations. The Tribunal held that renting of fitouts is a bundled service with renting of immovable property, making the denial unjustifiable.

12. Internet/Telecommunication Services:
Refund was disallowed due to the invoice not reflecting business calls. The appellant argued these services were essential for electronic communication with customers/vendors. The Tribunal found the denial unjustifiable.

13. Sponsorship Services:
These services were for enhancing organizational visibility, akin to advertisement services. The Tribunal held the refund was justifiable as these services fall under sales promotion.

14. Club or Association Services:
Refund was disallowed as club services are excluded from input services. The appellant clarified the services were for membership fees to the Indian Semiconductor Association, not for personal use. The Tribunal held the denial unjustifiable.

15. Legal Consultancy Services:
These services were deemed essential for business operations. The Tribunal found the denial unjustifiable as these services fall under the inclusive portion of input services.

Conclusion:
The Tribunal concluded that the disputed input services have a clear nexus with the output services provided by the appellant and are necessary for their business operations. Therefore, the appeal was allowed with consequential reliefs as per law.