2018 (12) TMI 1483 - AT - Service Tax

Refund claim - input services - rent a cab service - membership of club or association service - real estate agency service (visa) - management, maintenance repair services - export of services - Rule 5 of the Cenvat Credit Rules - Circular dated 19.01.2010 vide 120/01/2010-S.T. - Held that - The order of the Commissioner (Appeals) would have been sustained if there not been a clarificatory circular issued on 19.01.2010 vide 120/01/2010-S.T. by the Department of Revenue. The circular clearly indicates that conjoint reading of the Cenvat Credit Rules is to be made with Notification no. 5/2006-CX(NT) to broaden the meaning of input service so as to cover its relationship to output service. The said circular also has attempted a liberal approach in stating that example of services like outdoor catering, rent a cab for pick up and drop of employees to office etc. are input services, without reference to if such pick up is from office or from airport. It also had indicated that correlation and scrutiny of documents to establish nexus is not required to be made if Chartered Accountant certificate or a self certification of the exporter is available to that effect and the department officers are only required to make basic scrutiny of the documents, which if found in order, sanction the refund within a month in order to given effect export to zero rate. The said circular was mainly issued for call centres and BPOs established to cover export of services but contained broad outlines of admissibility of credits on export oriented units. The appellant is eligible to avail cenvat credits to get refunds on those services namely club and association, rent a cab management, maintenance and visa service which were held to be inadmissible by the Commissioner (Appeals) - appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claims on cenvat credit availed by appellant company engaged in export of investment advisory services due to inadmissible credit concerning rent a cab service, membership of club or association service, real estate agency service (visa), management, maintenance repair services.

Analysis:
1. The appellant, an investment banking forum providing advisory services, filed refund claims for cenvat credit not utilized on input services for the period July 2009 to December 2010. The Asst. Commissioner rejected part of the claim related to services provided to associated companies before 28.02.2010. The Commissioner (Appeals) sanctioned a partial refund but rejected certain credits as inadmissible, leading to the current appeal challenging the inadmissible part.

2. The appellant argued that various services like repair & maintenance, club membership, and rent a cab service had a nexus with the output services, citing Tribunal decisions and case laws to support their claim. They contended that these services were directly related to their business activities and should be eligible for credit. The appellant also clarified discrepancies in service categorization in their accounts.

3. The respondent department supported the Commissioner's order, stating that club membership services were for personal employee benefits, rent a cab service lacked proof of 24X7 office operation, real estate agency service lacked relevant invoices, and management, maintenance, and repair services had no established nexus to output services. The respondent argued against interference with the Commissioner's decision.

4. After hearing both parties and examining the case records, the Tribunal reviewed the disputed input services in detail. The appellant provided explanations for club membership, rent a cab service, and other services, emphasizing their business-related usage. The Tribunal considered a clarificatory circular issued by the Department of Revenue in 2010, broadening the definition of input services and simplifying the refund process for export-oriented units.

5. Considering the circular and judicial precedents, the Tribunal found the appellant eligible for cenvat credits and refunds on club membership, rent a cab, management, maintenance, and visa services deemed inadmissible by the Commissioner (Appeals). The Tribunal allowed the appeal, modifying the Commissioner's order to make the credit availed against these services eligible for refund, to be processed after the appeal period.

6. The appeal was allowed, and the order of the Commissioner (Appeals) was modified to enable the refund of eligible cenvat credits. The Tribunal's decision was pronounced in court on 12.12.2018.