2017 (7) TMI 943 - AT - Service Tax

Refund of input services - denial on the ground of lack of nexus and some of the services are not covered by the definition of input service - Held that - all the input services viz., Parking, Cafeteria, Fitouts, Building, Housekeeping, Management Consultant Services, Custom House Agent Service, Supply of Tangible Goods Service, Event Management Service fall in the definition of input service as provided under Rule 2(l) of the CCR - with regard to Outdoor Catering and Rent-a-Cab Service both these services are related to the period after the amendment of input service definition w.e.f. 01.04.2011 and the learned consultant has also agreed not to press the refund of these two input services - appeal allowed - decided partly in favor of appellant.

Summary

Issues: Refund claims rejected on grounds of lack of nexus and services not covered by the definition of 'input service'.

Analysis:

Issue 1: Lack of Nexus
The appellants filed seven appeals against the rejection of refund claims on input services due to a lack of nexus between the input services received and the output services exported. The Assistant Commissioner of Service Tax rejected the claims, stating that the nexus was not established. The Commissioner (Appeals) upheld this decision, leading to the appeals. The appellant argued that the impugned order denying the refund is contrary to the Cenvat Credit Rules and Notification 5/2006. The appellant contended that the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules is broad and includes services related to modernization, renovation, or repairs. The appellant cited various tribunal and high court decisions supporting their claim that the input services are directly or indirectly related to the output service exported.

Issue 2: Definition of 'Input Service'
The learned consultant for the appellant argued that all input services, except Outdoor Catering and Rent-a-Cab Service, fall within the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules. The appellant agreed not to press the refund claims for Outdoor Catering and Rent-a-Cab Service as these services were excluded from the definition post an amendment effective from 01.04.2011. The Tribunal found that services like Parking, Cafeteria, Fitouts, Building, Housekeeping, Management Consultant Services, Custom House Agent Service, Supply of Tangible Goods Service, and Event Management Service are covered under the definition of 'input service' and hence, the appellants were entitled to refunds for these services under Rule 5 of the Cenvat Credit Rules.

Conclusion
The Tribunal allowed all the appeals except for the refund claims related to Outdoor Catering and Rent-a-Cab Service. The decision was based on the fact that these two services were excluded from the definition of 'input service' post an amendment in 2011. The appellants were granted refunds for the other input services as they were deemed to have a nexus with the output services exported. The order was pronounced in open court on 12/04/2017 by Shri S.S Garg, Judicial Member of the Appellate Tribunal CESTAT Bangalore.