2021 (8) TMI 395 - AT - Service Tax

Refund of unutilized credit - input services - Freight Charges - Plant Rental Charges - Cleaning Charges - Pest Control Services - Payment made under RCM. Freight Charges - HELD THAT - Freight Charges are included in the inclusive part of the definition of input service under Rule 2 (l) of the CENVAT Credit Rules, 2004 and hence, the denial by the lower authorities is bad. The impugned order to this extent is set aside and this ground is allowed. Plant Rental Charges - HELD THAT - Since services of renting of equipment for organizing events are allowed as valid input service, the same logic should apply here and accordingly, in principle, the denial of CENVAT Credit is held bad. The Delhi Bench of the CESTAT in the case of M/s. HCL Technologies Ltd. v. C.C.E., Noida 2015 (8) TMI 595 - CESTAT NEW DELHI has held so - a perusal of the Order-in-Original as well as the impugned Order-in-Appeal makes it clear that there is no specific discussion on this issue. In view of this, this issue is remanded to the file of the Adjudicating Authority who shall verify all such details that may be furnished by the appellant and then pass appropriate order in the light of the directions/guidelines laid down by the Delhi Bench in the case of M/s. HCL Technologies Ltd. - matter on remand. Cleaning Charges - HELD THAT - It has been held in M/S HCL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE AND SERVICE TAX, NOIDA 2015 (9) TMI 1037 - CESTAT NEW DELHI that cleaning services are essential for providing output services and therefore, the same would qualify as input service and hence eligible for refund - the denial of CENVAT Credit on this service is bad. Pest Control Services - HELD THAT - This issue is akin to Cleaning Services, which is very much essential to keep the business premises safe and clean and hence, the denial is clearly uncalled for - refund allowed. Payment made under RCM - HELD THAT - This issue is remanded to the file of the Original Authority who shall verify the payment following the directions and then pass an appropriate speaking order in accordance with law. The appeal stands partly allowed and partly remanded.

Summary

Issues:
Denial of refund claim under Rule 5 of the CENVAT Credit Rules, 2004 for unutilized credit on inputs and input services used for providing output services.

Analysis:
The appellant contested the denial of CENVAT Credit on various services, including Freight Charges, Plant Rental Charges, Cleaning Charges, Pest Control Services, and Payment made under RCM. The appellant argued that Freight Charges are included in the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004, making the denial unjustified. The Tribunal agreed and set aside the denial of CENVAT Credit on Freight Charges. Regarding Plant Rental Charges, the Tribunal remanded the issue to the Adjudicating Authority for further verification based on the precedent set by the Delhi Bench of the CESTAT. The denial of CENVAT Credit on Cleaning Charges and Pest Control Services was overturned based on previous decisions that deemed these services essential for providing output services.

The denial of CENVAT Credit for payment made under RCM was also challenged. The appellant referenced a decision by the Bangalore Bench of the Tribunal, which emphasized that procedural lapses should not lead to the denial of refunds if payments were made in subsequent quarters. Following this precedent, the Tribunal remanded this issue to the Original Authority for verification and a speaking order in accordance with the law. Ultimately, the appeal was partly allowed and partly remanded for further proceedings.