Custom, Excise & Service Tax Tribunal
M/S J.P. Morgan Services (I) Pvt. Ltd vs Commissioner Of Service Tax, Mumbai on 1 June, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV
APPEAL NO. ST/89353 to 89355 & 89347/2014
(Arising out of Order-in-Appeal No. PD/ST II/594-597/2014 dated 28.05.2014 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai-I.)
For approval and signature: Honble Shri Anil Choudhary, Member (Judicial)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s J.P. Morgan Services (I) Pvt. Ltd.
: Appellant
Versus
Commissioner of Service Tax, Mumbai
: Respondent
Appearance
Shri Tarun Jain, Advocate
: For Appellant
Shri B.S. Meena, Additional Commr. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 01.06.2015 Date of Decision: 01.06.2015
ORDER NO.......................................................
Per: Anil Choudhary:
The appellant-assessee is in appeal against common Order-in-appeal upholding the rejection of refund in part, vide different Orders-in-Original, as follows:
Details of Credit Denied As Refund
Appeal No. ST/89354/14
Appeal No. ST/89347/14
Appeal No. ST/89355/14
Appeal No. ST/89353/14
OIO No. 16/11-12
dt. 25.04.11
OIO No. 17/11-12
dt. 25.04.11
OIO No. 18/11-12
dt. 25.04.11
OIO No. ST-II/Div-IV/91-R/2011-12
dt. 22.06.11
Sr. No.
Taxable Service
July, 2009 to Sep, 2009
Oct, 2009 to Dec, 2009
Jan, 2010 to Mar, 2010
Apr, 2010 to June, 2010
1.
Architect Service
81,297
96,889
1,43,530
41,459
2.
Civil Construction Service
23,153
6,92,264
49,857
(refund allowed on this count)
3.
Interior Decorator Service
1,12,673
92,978
-
2,46,523
4.
Storage & Warehousing Service
15,794
2,589
-
4,587
5.
Event Management Service
8,425
-
-
-
6.
Works Contract Service
16,57,640
15,65,539
98,370
35,75,201
7.
Cable Operator Service
5,992
-
-
510
Total
(Rs. 85,15,270/-)
19,04,974
24,50,259
2,91,757
38,68,280
2. The brief facts are that the appellant M/s J.P. Morgan Services (I) Pvt. Ltd. provide banking and other financial services, Business Auxiliary Services, Business Support Services and Management, Maintenance or Repair Service. Almost the entire services are exported and this is the reason service tax paid on input services was accumulated and could not be utilized by the appellant. Consequently being eligible, the appellant applied for refund of the input service tax credit, which remained unutilised, under the scheme of Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006 CE (N.T.). That refund claims have been allowed in part and partly rejected. The rejection is mainly on 2 grounds, namely some services like architect service, civil construction service, interior decorator service, storage and warehousing service, event management service, works contact service and cable operator service was held to be not an eligible input services for providing output services and accordingly the refund claim on CENVAT credit availed in respect of these services was denied. Secondly while applying the formula as given in appendix 5 of the Notification No. 5/2006, the adjudicating authority reduced from the amount of total credit during the period, the amount of credit utilised during the quarter and also the amount of CENVAT credit alleged to be ineligible.
3. Being aggrieved the assessee preferred appeal before the Commissioner (Appeals), who vide the impugned order have upheld the rejection observing as follows:
5. I have carefully gone through the records of the subject appeals, the written as well as oral submissions of the appellants made in their appeal memorandums and in the course of personal hearing held on 22.05.2014, and the adjudicating authoritys findings recorded in the impugned orders have been duly considered by me. The short issue to be decided in the appeal is whether the respondent has rightly rejected the refund claim or otherwise.
6. On going through the documents placed before me, I find that the appellant has availed CENVAT credit on services such as Architects Services, Civil Construction Services, Works Contract Services, Interior Decorator Services, Cable Operator Services, Storage & Warehousing Services, Event Management Services, etc. The adjudicating authority has observed that these services has not impacted the efficiency/consumed in providing the output services, which were subsequently exported. Further, the adjudicating authority also found no nexus between the input and output services, so have rejected claim. In this regard, I find that the appellant also failed to substantiate their claim with documentary evidences that the said input services have actually been used in or in relation of provision of their output services. I find that other than relying on judicial pronouncements, which are not relevant in the instant case, the appellant has failed to conclusively prove their point. Therefore, I find that the decisions of the adjudicating authority is just and legal.
7. Thus, the impugned Order-in-Original passed by the respondent is correct, and legal. Accordingly, I pass following order -
ORDER
In view of the findings, as discussed above, if confirm the Order-in-Original Nos 18/2011-12 dated 25.04.2011, 16/2011-12 dated 25.04.2011, 17/2011-12 dated 25.04.2011 & ST-II/Div-IV/91-R/2011-12 dated 22.06.2011 passed by the Deputy Commissioner, Service TaxII, Division-IV, Mumbai Commissionerate.
The subject appeals are disposed off in above terms.
4. Being aggrieved, the appellant is in appeal before this Tribunal on the ground that the services on which the refund of CENVAT credit is denied, is misconceived as the same have been utilised in providing the output services by the appellant. So far the works contract service is concerned the same have been used with respect to repairs of the premises. It is further urged that modernization, renovation and repairs of office premises is specifically included in the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004, Similarly civil construction service, interior decorator service, architect service, have been used for repair and renovation and modernization of the office. It is further urged that the observation of the Adjudicating authority, that vide Circular No. 120/1/2010 dated 19/1/2010, it is laid down that the absence of any input service has an adverse impact on the quality and efficiency of the provision of output service exported, it should be considered as eligible input service. Services directly relatable to the export business like renting of premises, the right to use software, maintaining and repair of equipment, telecommunication facilities etc. are certainly eligible. Services like rent-a-cab offered to employees of the office would also be an eligible input services as these offices run on 24 x 7 basis and transportation and provision of food for the employees are necessary perquisites which the employer has to provide to ensure that employees can work efficiently. Accordingly service tax paid on Manpower Recruitment Agency, Event Management for training of the staff are essential services. Some services like event management for company sponsored dinners/picnic hours, Flower arrangements, Mandap Keeper's expenses which are in the nature of recreational or used for beautification of premises may not appear to impact the efficiency in providing the output service. The adjudicating authority has observed that the appellant has provided the details of payment of service charges and tax thereon, to the supplier of input services which is duly annexed to the application for refund. It had been found that the appellant is fulfilling the conditions so far as the availment of CENVAT credit is concerned. The appellant have also submitted the declaration to this effect. With such observations the adjudicating authority further mentioned that on examining the credit element (input service wise), it is found that, except in the cases of architect service, civil construction, interior decorator, storage and warehousing and the credit of event management is in order. Works contract service has also been held to be not eligible for refund. It is further observed by the Adjudicating authority that the appellant have submitted the details of input service credit availed by them as per the provisions of Circular No. 120/01/2010, signed by their auditors.
5. The appellant further urges that under similar facts and circumstances this Tribunal in appellant's own case in appeal by Revenue, vide final order dated 25.11.2014, 2015 (38) STR 410, wherein the adjudicating authority sanctioned part of the refund claim and rejected a part of it for the reason that some 21 services received were not used in providing output service and hence, not classifiable as input service under Rule 2(l) of the CENVAT Credit Rules, 2004 and the other reason was that CENVAT credit was availed on the input services against input invoice which pertains to the period prior to registration. The Division Bench of this Tribunal has held, in view of the amendment, vide Finance Act, 2010 to Notification No. 5/2006 with retrospective effect from 14/3/2006, wherein for the word used in, the words used for was substituted, it had been held by the Tribunal that from the amendment it is apparent that the scope of the admissibility of input services used in providing export services have been brought on par with input services used for providing output services. It is further held that there is no reason to come to any sort of conclusion that the input services in question are not used in providing the output services exported by the appellant herein. Further on examining the definition of input services the Tribunal held that input services used for modernisation, renovation, repair of the office premises are also covered. The Tribunal did not agree with the learned A.R. that advertising, which is an input service, for the manpower recruitment service, will not be eligible. It was further held that any service which is an input for any other input service will get covered under the definition of input service on which credit is sought.
6. So far the second issue in the appeal is concerned, it is regards the disallowance in respect to application of the formula given in appendix 5 of the Notification No. 5 of 2006. The learned Counsel for the appellant urges that the same have been applied wrongly. That there is no scope for reduction of any amount from the total credit availed during the period, in respect of any credit used during the quarter or any amount as wrongly taken credit of. It is further urged that once the taking of credit is not disputed, there can be no disallowance of the same while granting refund. The learned Counsel relies on the ruling of this Tribunal in the case of Commissioner of Service Tax Vs. Convergys India Pvt. Ltd. 2009 (16) STR 198 wherein the Division Bench of this Tribunal have held that there cannot be two different yardsticks, one for permitting credit and the other for eligibility in granting refund. Whatever credit have been permitted to be taken, the same are permitted to be utilised and when the same is not possible, then there is a provision for grant of refund and/or the rebate. Without questioning the credit taken, the eligibility for rebate/refund cannot be questioned. This ruling of the Tribunal have been upheld by the Honble High Court in Revenues appeal vide order dated 3/8/2010, 2010 (20) STR 166 (P and H).
7. The learned AR relies on the impugned order. Reliance has further been placed on the ruling of the Honble Karnataka High Court in the case of Shell India Markets Private Ltd. Vs. Commissioner of Central Excise 2012 (278) ELT 50, wherein the facts were that the assessee was 100% EOU engaged in providing consulting engineer service and had filed refund claim under Notification No. 5/2006. It was held that the assessee had not produced certain documents and accordingly pursuant to show cause, it was explained that all input services received by the assessee are used only in relation to export of consulting engineer service and in absence of any other activity being performed by the assessee, the input service cannot be used for any other purpose, it was held that there is no nexus in respect of 15 services availed and the service exported. The Tribunal remanded the matter for the part of the refund rejected, and the Honble High Court had framed a question for consideration (i) whether the Tribunal was correct in passing the impugned order which was beyond the scope of the show-cause notice as the show-cause notice did not dispute the power of the Central Government to grant refund of CENVAT credit and (ii) whether the Tribunal was the right in holding that the Central Government had no power to grant refund of CENVAT credit, when the same was not an issue before it and (iii) whether the Tribunal was right in acting beyond jurisdiction in interpreting the provisions of the statute and holding that the Central Government does not have power to grant refund. It was held by the Honble High Court that the adjudicating authority or the appellate authority have not given any details for rejecting the claim of the assessee in respect of the input services in question. Except a statement having made that there is no evidence to substantiate the nexus between the input service and output service. In view of the fact that the assessee had produced material, and also given in tabular column, showing how input services is utilised in the output service, the minimum that was required of the Adjudicating authority, as well as the appellate authority is to refer to what they have said and then say what they feel about it. It was further held that there is no examination by them and accordingly the order of remand was upheld by the High Court.
8. Having considered the rival contentions, I find that the first issue as regards eligibility of certain services, as the inputs is covered by the earlier order of the Division Bench of this Tribunal in the appellant's own case being final order dated 25/11/2014 (supra). I also, on the facts hold that the input services in the nature of works contract service, civil construction service, interior decoration service, architect service availed by the appellant in repair, renovation, modernisation of its office are eligible input service. It is the discretion of the Management of the assessee company to decide in what type of office and the location, it wants to work for providing the output service. I find that there is no dispute as regards the amount of service availed. Further the service of storage and warehousing, have been incurred admittedly for packing & moving gadgets or things from one office premises to another. As the appellant operated from more than one premises, the said service is admittedly an eligible input service. So far event management services are concerned, it has been explained that the same is incurred in organising conferences, training sessions and meetings which are essential for the smooth running and business promotion. Accordingly I uphold the same as eligible input service. So far the cable operator service is concerned, the same have been incurred for availing/seeing business channels on television sets, installed in the office premises for the staff to remain updated with the business news & developments which is essential for providing efficient output service. Thus the same is also held to be eligible input service.
9. As regards the other aspect involved in this appeal, I hold that the learned Commissioner (Appeals) erred in upholding the deduction of credit utilized during the quarter and credit wrongly availed from the total credit taken. I hold that the formula as given in appendix 5 of the Notification No. 5/2006, only provides to work out the limit of eligible amount where an assessee has got both export and domestic turnover. Accordingly the eligible amount under appendix 5 shall be reworked without deduction of the amount towards credit allegedly wrongly availed, as the same are been found to be eligible. Accordingly there can be no deduction also for credit already utilised during the quarter.
10. Thus, the appeal is allowed. The appellant will be entitled to the balance amount of refund which was denied vide the impugned order. Only the exact amount shall be reworked in view of the observations made herein above. I further direct the original authority to rework the eligible amount of refund in terms of this order within a period of 8 weeks from the receipt of a copy of this order and the refund to be accordingly sanctioned and disbursed to the appellant, with interest, as per Rules.
(Pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 10