2021 (10) TMI 1175 - AT - Service Tax

Denial of partial refund - Works Contract Service - Sponsorship Service - denial of the cenvat credit on works contract service on the ground that the cenvat credit claimed related to the service tax paid on construction of commercial buildings and civil works that are specifically excluded in the definition of input services as defined under Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT - The work undertook by the appellant was only in the nature of modernisation/renovation/repairs by which no new structure or complex has come into existence and accordingly, the denial cannot sustain. Denial of cenvat credit on the sponsorship services is made alleging that the cenvat credit availed on this input service had no nexus with the output service exported - HELD THAT - This Bench in the case of SAMSUNG R AND D INSTITUTE INDIA BANGALORE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU EAST 2021 (3) TMI 1002 - CESTAT BANGALORE wherein a reference is drawn to the letter of the CBEC dt. 16/03/2012 that has done away with the nexus test and hence denial for want of nexus cannot sustain. Moreover, it has also been held in the above order that the Department having not questioned the cenvat credit availed by the appellant at the initial stage, the same could not be questioned when the claim for refund was made - the denial of cenvat credit on sponsorship services cannot sustain. It is deemed proper to remit this issue in these two appeals to the file of adjudicating authority before whom the appellant shall furnish the challan copies for the satisfaction of the Officer and upon being satisfied, the adjudicating authority shall thereafter follow the above ratio without insisting for nexus and issue the refund - appeal allowed by way of remand.

Summary

Issues: Denial of cenvat credit on Works Contract Service and Sponsorship Service

In the judgment, the Appellate Tribunal CESTAT BANGALORE addressed the denial of cenvat credit on Works Contract Service and Sponsorship Service in appeals against Orders-in-Original. The denial of cenvat credit on Works Contract Service was based on the exclusion of construction of commercial buildings and civil works from the definition of input services. The appellant argued that the work undertaken was only renovation/modernisation, not new construction, supported by invoices. The Tribunal found in favor of the appellant, stating that the denial cannot be sustained as no new structure or complex was created. Regarding the denial of cenvat credit on Sponsorship Service, it was alleged that the credit had no nexus with the exported output service. The Tribunal referred to a previous order and a CBEC letter, concluding that the denial for lack of nexus was unsustainable. Additionally, it was noted that the Department did not question the credit initially, making it impermissible to question it during the refund claim. The Tribunal ruled in favor of the appellant, stating that the denial of cenvat credit on Sponsorship Service cannot be sustained.

In specific appeals concerning Sponsorship Services, the adjudicating authority noted the absence of challan copies, leading to the inability to determine the exact nature of the service. The authority held that without the input invoice, the service could not be considered essential. While the precedent from a previous case was applicable, the Tribunal decided to remit the issue back to the adjudicating authority for the appellant to provide challan copies. Once satisfied, the authority was instructed to issue the refund without insisting on nexus.

Consequently, appeals ST/20107 to 20112/2021 were allowed, and appeals ST/20195-20196/2021 were remanded for the limited purpose of providing challan copies. The appellant was also granted consequential interest under Section 11BB of the Central Excise Act, which is automatic upon refund granting. The judgment was pronounced in the Open Court on 28/10/2021.