2016 (9) TMI 540 - AT - Service Tax

Cenvat credit - Tour operator service - Service utilised for pick up and drop of the employees to the work place - Held that - the main aim of cenvat credit scheme is to avoid the cascading effect of taxation i.e. to avoid imposition of tax on tax. The principle benefit intended through Cenvat Credit Scheme should not be lost sight of while interpreting the statutory provision. There is no doubt that the impugned services have been consumed by the appellant during the course of their business and have been accounted as business expenditure, therefore, the denial of credit is not warranted and the claim of CENVAT Credit on tour operator service is allowed. Cenvat credit - Travel agency service - rendering of SAP implementation and support service to parent and subsidiary companies located outside India - Held that - the services of the air travel agent was availed for making travel arrangements of employees to meet clients in connection with marketing and accordingly shall be eligible for refund. As long as the Travel Agency Service is not received for personal benefit of any employee but meant for travel of office personnel, credit is not deniable. This service is in connection with production, planning, import, marketing etc. Therefore, by following the decision of Hon ble Gujarat High Court in the case of Principal Commissioner Vs Essar Oil Ltd. 2015 (12) TMI 1062 - GUJARAT HIGH COURT the credit is allowable. Cenvat credit - Foreign exchange service - FOREX was purchased and the same was given to the employees who travel outside India in order to execute their work - services of Forex broker has been utilized for foreign exchange - Held that - the expenditure has been incurred by the appellant for the purpose of providing its output service. The said service has not been specifically excluded under the definition of input service. Therefore, the said service will qualify in the first limb of the definition of input service i.e. used in or in relation to provision of output service and accordingly shall be entitled for refund. Cenvat credit - Renting of Immovable property services - rented premise is used for the purpose of carrying on the business i.e. for providing the output service - Held that - it is an undisputed fact that the appellants are engaged in providing output service namely online database access and retrieval services, and it is impossible for the appellants to provide the service without building or a proper premises, absence of which would adversely affect the quality and efficiency of the provision of service exported. Therefore, as clarified by CBEC vide circular dated 19.01.2010, I find that rent has a direct nexus with the output service provided by the appellants and hence are eligible for the credit. - Decided in favour of appellant

Summary

Issues:
Refund claim rejection for input services - Tour Operator, Travel Agent, Foreign Exchange, Renting of Immovable Property.

Analysis:

Tour Operator Service:
The appellant sought a refund for tour operator services used for employee transportation. The CESTAT Chennai observed that the services were essential for the business and not for personal use. Relying on judicial precedents, the tribunal allowed the CENVAT credit for tour operator services to avoid tax cascading.

Travel Agent Service:
Regarding travel agent services for employee travel related to business activities, the tribunal found the services eligible for refund. It emphasized that as long as the service is not for personal benefit and is connected to business operations, credit should be granted. The decision aligned with previous court rulings supporting such claims.

Foreign Exchange Service:
The appellant purchased foreign exchange for employees traveling abroad for work purposes. The tribunal acknowledged the expenditure as necessary for providing output services and not excluded from input services. Thus, the tribunal allowed the CENVAT credit for foreign exchange services under the first limb of the input service definition.

Renting of Immovable Property:
The appellant leased premises for business operations, which were crucial for service provision. Despite a change in the registered premises, the tribunal deemed the rented property essential for the output service. Citing relevant cases and circulars, the tribunal held that renting immovable property directly related to the quality and efficiency of service provision, making the appellant eligible for CENVAT credit.

In conclusion, the CESTAT Chennai allowed the appeal, emphasizing the importance of input services for business operations and the eligibility of the appellant for CENVAT credit on the disputed input services.