2016 (9) TMI 691 - AT - Service Tax

Refund of cenvat credit - 100% EOU - export of services - appellant is a 100% EOU engaged in the service of information technology service named E publishing of books , they are exporting output service namely information technology software service which is covered under section 3(iii) of the Service Tax Rules, 2005 - Held that - renting of immovable property service is having direct nexus in the manufacture of goods. Rule 2(1) of CCR, 2004, clearly mentions that service utilized in or in relation to manufacture of final products is eligible as input services. Hence, credit on renting of immovable property is eligible for the appellants. Various other input services - Held that - It is evident that without availing all these services, the appellant would not be in a position to provide the output service of E Publication of Books. Absence of it would adversely affect the provision of output service. Hence, such services are directly related to output service and fully satisfy the definition of input service as given in Section 2 (l) of the CCR, 2004, and accordingly shall be eligible for refund (except for meal charges/food coupon). Rejection of refund on procedural grounds / lapses - Held that - the impugned O-in-As to the extent of rejection of refund, on grounds of non availability of service tax registration numbers, is not maintainable and the same is liable to be set aside and appeal is liable to be allowed. The rejection of refund covered by certain invoices on grounds that description of input service not mentioned properly is not proper since the appellant gave gave clear evidences before Commissioner (Appeals) explaining nature of service rendered by such input service providers and also justified the essentiality of such input services in rendering their output services. The Appellant shall be entitled for CENVAT Credit and consequent credit in accordance with the principles laid down by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. 2016 (2) TMI 902 - SUPREME COURT - Decided in favor of assessee.

Issues Involved:
1. Eligibility for refund under Rule 5 of the Cenvat Credit Rules, 2004 for disputed input services.
2. Validity of refund rejection due to procedural aspects such as non-mention of service tax registration number, improper description of input service, and service tax not claimed in invoices.

Detailed Analysis:

1. Eligibility for Refund Under Rule 5 of the Cenvat Credit Rules, 2004:

i) Renting of Immovable Property Services:
The appellants argued that renting of immovable property was essential for their operations, as it provided necessary infrastructure to perform their services. The Tribunal agreed, stating that the absence of such premises would adversely affect the quality and efficiency of the exported services. The Tribunal referenced the CBEC circular dated 19.01.2010 and previous judgments, confirming that rent has a direct nexus with the output service, making it eligible for credit.

ii) Rent-a-Cab Service:
The appellants contended that rent-a-cab services were used for employee transportation, which is essential for providing their output services. The Tribunal supported this view, citing the Karnataka High Court decision, and allowed the credit, recognizing the service's role in promoting business efficiency.

iii) Consultancy Services:
The appellants used consultancy services for strategic support, marketing, and business promotion. The Tribunal found these services crucial for business operations and eligible for credit.

iv) Antecedent Charges:
These charges were related to manpower recruitment and background verification. The Tribunal deemed them essential for providing quality output services and allowed the credit, referencing the Deloitte Tax Services case.

v) Housekeeping and Cleaning Services:
The Tribunal acknowledged the necessity of maintaining a clean and hygienic workplace for smooth business operations, thus allowing credit for these services, supported by the Rotork Control case.

vi) Professional Charges:
These charges were related to manpower recruitment agents. The Tribunal found them covered under the definition of input service and allowed the credit.

vii) Meal Coupon:
The Tribunal did not accept the appellants' argument that meal coupons boosted employee morale and productivity, categorizing them as welfare activities not eligible for credit.

viii) DG Hire Charges:
The Tribunal allowed credit for DG hire charges, recognizing the necessity of continuous power supply for providing uninterrupted services.

ix) Insurance Charges:
The Tribunal found insurance for electronic systems and appliances essential for business operations, allowing the credit, referencing the Sterilite Industries case.

x) Subscription Charges:
The Tribunal allowed credit for subscription charges, acknowledging their role in keeping the company updated with technological and business developments, referencing the Allaince Global Services case.

xi) Delivery Fee and Customs House Agents:
The Tribunal recognized these services as pivotal for export operations, allowing the credit.

xii) Sewage Treatment:
The Tribunal allowed credit for sewage treatment services, referencing statutory requirements and the Indian Farmers and Fertiliser Coop Ltd case.

xiii) Air Travel Agent:
The Tribunal allowed credit for air travel agent services, used for employee travel arrangements related to marketing.

xiv) Chartered Accountant Service:
The Tribunal found this service essential for auditing and financial accuracy, allowing the credit.

xv) Commercial Coaching & Training Charges:
The Tribunal allowed credit for coaching and training services, recognizing their importance in employee development.

xvi) Manpower Recruitment and Supply Agent:
The Tribunal allowed credit for these services, essential for securing skilled manpower, referencing the Garware Polyster case.

xvii) Legal Consultancy Services:
The Tribunal allowed credit for legal consultancy services, essential for business operations and specified in the input service definition.

xviii) GTA Service and Technical Inspection Services:
The Tribunal allowed credit for these services, recognizing their role in export operations.

2. Validity of Refund Rejection Due to Procedural Aspects:

i) Non-availability of Registration Details of Input Service Providers:
The Tribunal found that the appellants had provided the necessary registration details from the CBEC website, making the rejection of ?55,578/- on this ground invalid.

ii) Description of Input Service Not Mentioned Properly:
The Tribunal found that the appellants had provided clear evidence explaining the nature and necessity of the input services, making the rejection of ?1,18,427/- on this ground invalid.

iii) Service Tax Not Claimed in Invoices:
The Tribunal accepted the appellants' documentary evidence of service tax payments under reverse charge, making the rejection of ?78,508/- on this ground invalid.

Conclusion:
The Tribunal concluded that the appellants are eligible for the refund of CENVAT credit for all disputed input services except for meal vouchers. The impugned order was set aside, and all appeals were allowed.

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