2018 (5) TMI 560 - AT - Service Tax

Refund of unutilized CENVAT credit - input services - Health Insurance Service - Services by Air Conditioned Restaurants - Management, Repair and Maintenance Service - Renting of Immovable Property service - Supply of Tangible Goods Services - Event Management Service - Transportation of employees services - Management or Business Consultant s service - Security Agency Service - Catering or Staff Welfare Services - Sponsorship Services - Business Exhibition Service - Share Valuation Service - General Insurance Services - denial on the ground of nexus - Held that - after the amendment in the definition of input service w.e.f 1.4.2011 certain input services have been specifically excluded and health insurance is one of the input service which has been specifically excluded from 1.4.2011 - refund on health insurance rightly rejected. Services by Air Conditioned Restaurants - Held that - the appellant himself have admitted that it has been inadvertently availed and the same will be reversed. Management, Repair and Maintenance Service - Held that - these services are consumed for the maintenance and repair of the office premises, facility management charges and charges for housekeeping, which are required for effectively and efficiently providing the export of service - these services falls in the definition of input service subject to the verification of the invoices which are enclosed by the appellant along with the appeal papers - matter on remand. Renting of Immovable Property service - Held that - this service falls in the definition of input service and the appellant is entitled to the refund of service tax paid on this input service subject to verification of the invoices - matter on remand. Supply of Tangible Goods Services - Held that - equipments like photocopier machine have been obtained on lease to be used for provision of output service and without such equipment the appellant may not be in a position to render the services smoothly - this service also falls in the definition of input service and therefore, the appellant is eligible for credit subject to verification of the invoices - matter on remand. Event Management Service - Held that - this service falls in the definition of input service as the said services are integral to the provision of output service - refund allowed. Transportation of employees services - Held that - These services are directly linked to the performance of the employees and are required for provision of export of output service - This service falls in the definition of input service and therefore, the appellant is entitled to refund of service tax subject to verification of invoices - matter on remand. Management or Business Consultant s service - Held that - these services are in relation to profession or business consultancy charges paid towards preparation of statutory documents like Form 16 under Income Tax Act, 1961 and this service includes professional consultancy services in relation to information technology and its related equipments - This service falls in the definition of input service and therefore, the appellant is entitled to refund of service tax subject to verification of invoices - matter on remand. Security Agency Service - Held that - this does not fall in the definition of input service and it is only a welfare activity for the security agency - refund rightly rejected. Catering or Staff Welfare Services - Held that - outdoor catering service is not eligible for input service credit post amendment dated 1.4.2011 and therefore, the appellant is not entitled to refund on account of this service - refund rejected. Sponsorship Services - Held that - this falls in the definition of input service as sales promotion service are specifically included in the definition of input service as per Rule 2(l) of CCR - refund allowed. Business Exhibition Service - Held that - business exhibition conducted for the prospective customers and the said service are specially included in the definition of input service as per Rule 2(l) of CCR - refund allowed. Share Valuation Service - Held that - this service is in relation to the share valuation service received from an authorized share valuator and this fall in the definition of input service - refund allowed. General Insurance Services - Held that - this kind of insurance falls in the definition of input service as it is required in connection with the business operation and providing output business services - refund allowed. Refund of ₹ 6,90,950/- on the ground that the invoices have not been produced - Held that - appellant submits that the invoices were submitted before the authorities but they were not examined and he undertakes to submit the invoices again before the adjudicating authority if the matter is remanded - matter on remand. Refund of ₹ 9,466/- was rejected on the ground that Service Tax Registration number was not available - Held that - refund cannot be rejected on procedural infractions - refund allowed. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Rejection of refund on certain input services.
2. Nexus between input services and output services.
3. Procedural compliance for refund claims.

Detailed Analysis:

1. Rejection of Refund on Certain Input Services:
The appellant sought refunds for unutilized input service tax credits under Rule 5 of CENVAT Credit Rules, 2004, read with relevant notifications. The Commissioner (A) allowed refunds for some services but denied others, leading to the present appeals. The services for which refunds were denied include Health Insurance, Services by Air Conditioned Restaurants, Management, Repair and Maintenance, Renting of Immovable Property, Supply of Tangible Goods, Event Management, Transportation of Employees, Management or Business Consultant's Services, Security Agency Services, Catering or Staff Welfare Services, Sponsorship Services, Business Exhibition Service, Share Valuation Service, General Insurance Services, and others where invoices were missing or Service Tax Registration numbers were not available.

2. Nexus Between Input Services and Output Services:
The core issue was whether the denied input services had a direct nexus with the output services provided by the appellant. The Tribunal examined each service in detail:

- Health Insurance Service: Rejected as it was specifically excluded from the definition of 'input service' post-1.4.2011.
- Services by Air Conditioned Restaurants: The appellant admitted it was inadvertently availed and agreed to reverse it.
- Management, Repair and Maintenance: Accepted as input service subject to invoice verification.
- Renting of Immovable Property: Accepted based on precedents, subject to invoice verification.
- Supply of Tangible Goods Services: Accepted as necessary for smooth service provision, subject to invoice verification.
- Event Management Services: Accepted as integral to the provision of output services, supported by multiple case laws.
- Transportation of Employees Services: Accepted as essential for employee performance and provision of output services.
- Management or Business Consultant’s Services: Accepted as related to professional consultancy necessary for business operations.
- Security Agency Services: Rejected as it was deemed a welfare activity, not an input service.
- Catering or Staff Welfare Services: Rejected based on the Larger Bench decision in Wipro Ltd. case.
- Sponsorship Services: Accepted as sales promotion, subject to invoice provision.
- Business Exhibition Service: Accepted as it falls within the definition of 'input service'.
- Share Valuation Service: Accepted as it is necessary for business operations.
- General Insurance Services: Accepted as it protects business operations and is thus an input service.
- Invoices Not Available: Rejected due to lack of documentation, but the appellant can resubmit for verification.
- Service Tax Registration Number Not Available: Accepted as a procedural infraction, not a substantive issue.

3. Procedural Compliance for Refund Claims:
The Tribunal emphasized the importance of procedural compliance but also noted that minor procedural lapses should not result in the denial of substantive rights. For instance, the absence of Service Tax Registration numbers was deemed a procedural issue, and refunds were allowed subject to compliance with Rule 9(1) of CCR and Rule 4A of the Service Tax Rules.

Conclusion:
The Tribunal remanded the case to the original authority for verification and examination of the documents supporting the refund claims. The original authority is to decide the refund claims based on the Tribunal's findings. All appeals were allowed by way of remand.