2017 (1) TMI 32 - AT - Service Tax

STPI unit - Rejection of refund claim - Rule 5 of CCR - N/N. 5/2006 dated 14.03.2016 - Held that - The Tribunal in the case of Alliance Global Services IT India (P) Ltd., Vs. CCE & ST Hyderabad 2016 (6) TMI 720 - CESTAT HYDERABAD) had occasion to analyze the same services and held that these services qualify as input services and are eligible for credit - the rejection of refund is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection under Rule 5 of CENVAT Credit Rules read with Notification No. 5/2006 dated 14.03.2016.

Analysis:
The appellant, an STPI Unit registered with the Service Tax department, filed a refund claim for the period July 2011 to September 2011, seeking ?19,14,037. The Original Authority partially sanctioned the refund but rejected ?6,73,971. The appeal was made before the Commissioner(Appeals), who upheld the rejection, leading to the current appeal.

Input Services Dispute:
The appellant's Counsel argued that various input services like Courier Service, Chartered Accountant Service, Air travel agent Service, and others were essential for providing output services. He contended that the authorities erred in rejecting the refund, citing judgments supporting the qualification of these services as input services. The appellant clarified the purpose of each service, demonstrating their necessity for business operations and improvement.

Department's Position:
The Department's representative reiterated the findings of the impugned order, stating that the refund was rejected because the input services were not deemed directly essential for providing output services.

Judgment and Analysis:
The Member (Judicial) analyzed the purpose and usage of the disputed services, finding that most fell within the definition of input services. Referring to judgments supporting the appellant's claim, the Member held that the rejection of the refund was unjustified. Noting the necessity and relevance of the services for business operations and efficiency, the Member set aside the impugned order's rejection of the refund claim, except for outdoor catering services. The appeal was partly allowed with consequential reliefs, if any, granted.

This judgment highlights the importance of establishing the nexus between input services and output services for claiming refunds under CENVAT Credit Rules. It emphasizes the need for a thorough analysis of the purpose and usage of input services to determine their eligibility for credit, as demonstrated through the detailed examination of various services in this case.