2016 (6) TMI 720 - AT - Service Tax

Refund - Cenvat Credit - Export of services - nexus of input service with the output services - works contract services and various other input services - Held that - Rule 2(l) excludes service portion in the execution of a works contract and construction services including service listed under clause (b) of Sec. 66E of the Finance Act, 1994, in so far as they are used for (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods. That in the present case, the works done as per the invoice though classified as works contract services in the invoices would not fall in the exclusion portion as it is not for construction of building, civil structure or part thereof or for laying foundation or structures for capital goods. These services were used for fixing doors etc. which is nothing but renovation, repair of premises of the service provider. - subject services qualify as input services and that they do not fall in the exclusion portion of the definition. Refund of cenvat credit of various input services including works contract service allowed - Decided in favor of assessee.

Summary

Issues involved: Rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004 r/w Notification No.5/2006-CE(NT), dated 14-03-2006.

Analysis:
1. The appellant, engaged in Information Technology Software Services, filed a refund claim for unutilized input service tax credit, which was partially rejected by the original authority. The Commissioner (Appeals) upheld the rejection, leading to the current appeal.
2. The rejection was based on the nexus of input services with the output services provided by the appellant. Various services like Manpower Recruitment, Renting of immovable property, Cleaning Activity, and others were under dispute.
3. The authorities relied on a judgment regarding the interpretation of inputs, not input services, which was wrongly applied in this case. The appellant argued the eligibility of the services under dispute as input services based on their necessity for providing output services.
4. The appellant detailed how each service, such as Commercial Training, Courier Service, and Works Contract Service, directly contributed to the provision of output services and did not fall under the exclusion portion of the definition of input services introduced in 2011.
5. The consultant successfully argued that the services in question qualified as input services and were essential for the efficient provision of output services. The Tribunal held in favor of the appellant, allowing the credit/refund of the service tax paid on the disputed services.
6. The impugned order was set aside, and the appeal was allowed with consequential reliefs, if any, on 05/05/2016.