Custom, Excise & Service Tax Tribunal
The Assessee Are Engaged In Providing ... vs Unknown on 9 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. ST/245 to 248/11, ST/89060 to 89070/13 Arising out of Order-in- Appeal No. RBT/11-14/2011 dated 20-1-2011 & No. 175 to 185/BPS/MUM/2013 passed by the Commissioner of Central Excise (Appeals-IV), Mumbai Zone-I ] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, Member(Technical) =======================================================
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 :
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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DBOI Global Services Pvt Ltd
:
Assessee
VS
Commissioner of Service Tax, Mumbai
:
Revenue
Appearance
Shri. Abhishek Rastogi, CA with Ms. Rashmi Deshpande, Advocate for the Assessee
Shri. Roopam Kapoor, Commissioner(A.R.) with Shri. A.K. Goswami Addl. Coomissioner(A.R.) for the Revenue CORAM:
Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, Member(Technical) Date of hearing: 9/6/2016 Date of decision: 7/10/2016 ORDER NO.
Per : Ramesh Nair The assessee are engaged in providing services such as function of maintaining static data filled with software(DB Control) i.e. data base of the client. These services of providing status report, static data maintenance etc are in the nature of back office support services to the overseas client. The said services was classified as Business Support Service as the services provided by the assessee are in the nature of support services for business or commerce. In respect of above services which were exported. assessee filed various refund claims for unutilized input service credit under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-C.E.(NT) dated 14/3/2006. The adjudicating authority rejected claims on the ground that services on which Cevnat credit was availed and claimed as refund are not input services and nexus between said input services and output services is not established. Apart from above ground in respect of one of the refund claim for the period October, 2008 to March, 2009 was rejected also on the following grounds.
(a) Invoices are not in the name of the DBOI Global Services Pvt Ltd.
(b) Name of the assessee is not proper in the invoices
(c) Input services rendered to the Deutsche bank and invoices is also in the name of Deutsche bank and not in the name of present assessee.
(d) In complete name description of services mentioned in invoices,
(e) Input invoices raised on some other name.
(f) Services rendered to SEZ Unit.
(g) Invoices addressed to Deutsche Assets Management India Pvt Ltd or Global Market Industries Pvt Ltd
(h) unregistered address of the assessee mentioned on the invoices
(i) Input invoices did not contain PAN based Registration number
(j) No proper FIRC In addition to above grounds, there is a common issue involved in all the cases that there is computation error as prescribed formula was not applied correctly. On the above issues of the adjudicating authority, assesse filed appeals before Commissioner (Appeals) who partly allowed the refund and partly denied therefore assessee filed four appeals bearing no. ST/245-248/11 and Revenue also filed appeals bearing No. ST/89060-89070/13.
2. Shri. Abhishek Rastogi, Ld. CA with Ms. Rashmi Deshpande, Advocate appearing on behalf of the Assessee submits that as regard the common issue of nexus of input services with the output service, Ld. Commissioner has allowed the refund after considering the nature of services and use thereof. The services were used only for providing output services which have been exported. Therefore the department appeals disputing nexus has no basis, therefore appeals of the department do not survive. As regard the partys appeals, he submits that refund claims are related to four services i.e. Event Management Services, Pandal and Shamiana Contractors Services, Mandap Keepers services, Health and Fitness Services. He submits that all these services are being used for function of the organization for providing output services. He further submits that these services for the earlier occasions, have been allowed as admissible input services and refund was granted which has been accepted by the department. Therefore, Commissioner(Appeals) rejected the appeals on the same services is contrary to the earlier orders. As regard the issue of quantification, due to dispute in application of prescribed formula for the purpose of calculating the correct refund claim, he fairly submits that this aspect needs to be re-verified. For this purpose, the matter should be sent to the Original Adjudicating authority for limited purpose. As regard the other issues, he submits that regarding different name appeared on the input services invoices, this is due to the reason that earlier appellant company was operating in different name and subsequently it was amalgamated and renamed as DBOI Global Services Pvt Ltd therefore in certain cases invoices were received in the old name of the company but that does not make any difference as the entity remained the same. As regard the invoices showing the services rendered to Deutsche Bank, he submits that Deutsche Bank is not different from the appellants company as Deutsche Bank is part and parcel of the company therefore even though the bill showing the name of the Deutsche Bank services received by the appellant company. As regard the incomplete name and description of the services appearing on the invoices, he submits that it is clerical error, however, there is no dispute that the services were received and used and the payment there against was made to the service provider against their invoices therefore due to some clerical error in the invoices regarding the description of the services, will not amount to disallowance of the Cenvat credit and consequential refund. As regard the services rendered to the SEZ unit, he submits that SEZ unit belong to the appellant company only and that is also engaged in providing services which were exported therefore refund even in case of services rendered to the SEZ is admissible for the refund. Some invoices were raised in the name of the Deutsche Assets Management or Global Market Industries Pvt Ltd. In this regard, he submits that these are the group companies of the appellant therefore though invoices were raised in the name of the aforesaid company but services were used for providing output services of the appellant. Regarding the unregistered address of the appellant appearing on the invoices, he submits that though, it is unregistered address but it is part of the appellant and there is no dispute about the receipt of the input services and used in the export services. The registration is not the sole criteria for refund under Rule 5. The discrepancies raised such as PAN based registered number is not appearing in the invoices, he submits that it is department, who has to issue registration, in certain cases PAN registration is not available but services provider are registered, in such case, only for want of PAN based registration Cenvat credit on the recipient end cannot be denied. As regard the issue on the dispute of improper FIRC, while re-quantification of the refund amount by applying correct formula, FIRC can be reverified at that time therefore this can also be taken in the remand proceedings.
3. Shri. Roopam Kapoor, Commissioner(A.R.) with Shri. A.K. Goswami Addl. Commissioner (A.R.) for the Revenue, as regard the parties appeal, he reiterates the findings of the impugned order. As regard the Revenues appeal, he reiterates the grounds of appeal. He further submits that input services disputed in the departmental appeals do not have direct role in providing output service. He submit that unlike input where connotation input is used for manufacture whether directly or indirectly, in or in relation to manufacture of final product. In case of input service the word directly or indirectly and in or in relation are missing therefore scope of input service is limited, that shows if the services are directly used in providing output service then only it will be considered as input service which have used by the service provider. All the services which are disputed in the appeals are not directly used in providing output services therefore that services have no nexus with the output services and accordingly neither Cenvat credit is admissible on such services nor refund under Rule 5.
4. We have carefully considered the submissions made by both sides and perused the records.
5. We find that as regard the dispute that certain services do not have nexus with the export services. The Commissioner(Appeals) while allowing the Cenvat credit and refund considered the use of the said services as under:
(a) Commercial Coaching or Training Services: The appellant has availed these services for imparting knowledge to its employees and to keep them updated. These trainings inter alia include providing trainings on Microsoft office, investment banking SOX and Basel II norms, US GAAP and IFRS etc. Updating/enhancing employees knowledge is key to success of a business organization. Further, coaching and training is included in the inclusive part of the definition of input services.
(b) Business Auxiliary Services: The appellant has availed certain incidental /auxiliary services such as, maintenance of accounts/registers, management of mailroom operations and other similar auxiliary services. These services are covered under clause(vii) of the definition of Business Auxiliary Services as provided under Section 65(19) of the Finance Act, 1994.
(c) Courier Agency Services: The appellant has availed these services for courier of various business documents and parcels. Timely exchange of Business documents is essential for smooth functioning of the business. Further courier services used for domestic or international couriers is not material because of the following:
# Credit of domestic/international couriers is admissible and unutilized portion of credit so availed is claimed as refund.
Furthermore, the CBEC Circular has clarified that courier services satisfies the eligibility test for determining the nexus of input services with output services.
(d) Real Estate Agents Services: The appellant has availed these services for purchasing, leashing or renting, of business premises. Such Premises are used for providing output services
(e) Rent a Cab Scheme Operators Services: The appellant has large number of employees on its payrolls who are engaged in rendering export services. Due to different time zones, employees work at odd hours and on shift basis. The appellant therefore hires cabs to pick up its employees from their residence and drop them back. Such services are essential for employees securities who report/ leave from office at odd hours. Further the CBEC Circular has clarified that rent-a-cab services satisfies the eligibility test for determining the nexus of input services with out put services.
(f) Advertising Agencys Services: The appellant has availed these services for displaying banners/ hoardings etc. in its business premises to keep the employees aware of the various events/activities.
(g) Architect Services: The appellant has availed these services for building the office/business facility so that employees could work in an environment most congenial for rendering their services. Also such services are availed for optimum utilization of office space.
(h) Cable Operators Services: The appellant provides its services from various locations in India. Cable Operators services are essential for the appellant to be constantly updated with news, outrage, unusual events etc. and take immediate steps/ initiate backup plant to provide uninterrupted services to its clients. Further, the appellant is engaged in the activity of providing support services to its clients located all over the world. Therefore, it is imperative for the appellant to be constantly updated with news and events happening all over the world.
(i) Cargo Handling Services: The appellant has availed these services for lading and unloading of the equipments/assets/goods such as computers and servers which required to perform the business operations.
(j) General Insurance Services: The appellant has taken insurance policy to secure its immovable and moveable properties from fire and burglary. Further, international business travel policy has been taken for the employees who travel across the globe for rendering output services. Such insurance policies are essential for securing and covering business risks which may occur due to some unexpected event. Further, CBEC circular has clarified that general insurance services satisfies the eligibility test for determining the nexus of input services with output services.
(k) Supply of tangible goods services: The appellant has availed these services for hiring of certain electronic and non electronic appliance/equipments(including vending machines for food) in order to provide their out put services efficiently.
(l) Insurance Auxiliary Services: Under Section 65(55) of the Finance Act, 1994 "insurance auxiliary service" is defined as any service provided by an actuary, an intermediary or insurance intermediary or an insurance agent in relation to general insurance business and includes risk assessment, claim settlement, survey and loss assessment. The appellant has taken insurance policies to secure its moveable, immovable assets against fire, burglary. Further, global business travel policy has been taken for the employees who travel abroad for rendering the output services. Thus, for placing these insurance policies, the appellant availed services of an insurance agent.
(m) Outdoor caterers Services: The appellant provides service to its clients located in foreign countries. Due to different time zones, services are provided by the appellant round the clock and therefore, the employees are required to work on shift basis. The appellant provides food and snacks to its employees since there is no such facility available in the vicinity where the employees can eat food and bring refreshments back to their workstations. Therefore the appellants has availed these services to provide food/snacks to its employees round the clock. Further, the CBEC circular has clarified that outdoor catering services satisfies the eligibility test for determining the nexus of input services with output services.
(n) Storage and warehousing Services: Appellant has availed these services for storage/retrieval of its files and documents which are required to be maintained under various statutory enactments. Further, these services are also availed for storage of belongings/ goods of the employees relocated for the purpose of provision of output services.
(o) Video Production Agency Services: The service relating to video tape production is availed by the appellant to facilitate recording of business presentations, business events such as induction programme, training etc. from a professional videographer on a CD. Appellant uses these CDs to display the presentation to its employees and thereby enhance their learning. Thus, the appellant uses these services as a means for imparting knowledge and training which is essential for the furtherance of business and commerce.
(p) Technical Testing and Analysis Services: The appellant has availed these services for testing samples of food/water provided to its employees. Such hygiene tests are required to be performed so as to ensure that proper quality food/water is supplies to its employees.
(q) Tour Operator: The appellant has impart training to its employees to train them and to keep them updated. These training are either imparted in-house or at an off the site location. In order to drop the employees at the training location the appellant has availed these services of tour operators.
From the above justification, we observed that as per the nature and use of the services there is no doubt that all the services were essential services and used for office of the service provider for the purpose of providing Business Support Service. All the above services are invariably used therefore, it cannot be said that there is no nexus of the above services with export services, we therefore agree with Ld. Commissioner(appeals) that all the above services are indeed input service and accordingly they have nexus with the exports services and Cenvat credit as well as refund is admissible. As regard the partys appeal, Ld. Commissioner(Appeals) denied the Cenvat credit and consequential refund on the following four services. We find for the purpose of providing output service, it was held to be admissible input services in the various judgments. Use of the services and relevant judgments under which these services were considered as input services are given below:
1Event Management Services DBOI appointed event managers to manage its business events such as annual offsite to discuss companys performance, targets and future with its employees, alongwith cultural events. These business events are essential to keep the employees motivated, committed and to foster relationships. Thus, these services are actually procured in relation to the business which helps them in improving interpersonal skills, rejuvenate, increase efficiency and to improve their performance in the business.
1. Accenture Services (P) Ltd Vs. Commissioner[2015(63(Taxman.com 235]
2. IBM India Pvt Ltd Vs. Commissioner[2014(35) STR 384]
3. Shakun Advertising (P) Ltd Vs. Commissioner[2015 64 taxmann.c0m 153
4. Gateway Termincals (I) Pvt Ltd Vs. Commissioner[2015 (39) STR 1027] 2 Mandap Keeper Services DBOI availed the mandap keepers services to conduct various official or business functions. Therefore, these services are covered under the activities relating to business and qualify as input service as defined under CCR. Thus, the refund of the CENVAT credit availed on such services is admissible.
1. Endurance Technologies Pvt Ltd Vs. Commissioner[2013(32) STR 95]
2. Idea Cellular Ltd Vs. Commissioner [2011(22) STR 450
3. Accenture Services (P) Ltd Vs. Commissioner[2015(63(Taxman.com 235] 3 Health and Fitness Services DBOI procured fitness equipment and professional trainers to coach the employees to improve their overall health and fitness. Employees work at odd hours for the provision of output services, these services are essential to remove stress and increase the efficiency of our employees. Further, DBOI also carries out periodic health checkups for employees.
1. Commissioner Vs. Ford Business Services Centre Pvt Ltd[2015(38) STR 700] 4 Pandal and Shamiana Contractors Services DBOI used the services of pandal or shamiana contractors to organise official, social or business function. Therefore, these services are covered under the activities relating to business and qualify as input service as defined under CCR. Thus, the refund of the CENVAT credit availed on such services is admissible.
1. H.E.G. Ltd Vs. Commissioner[2009 23 STT 157]
2. Commissioner Vs. Ford Business Services Centre Pvt Ltd[2015(38) STR 700] From the above detailed use of the service and with support of the various judgments in respect of individual services, it is clear that these services are input services and have nexus with output services, we therefore hold that the Cenvat credit as well as consequential refund against exports of the services in respect of above services are admissible. As regard one particular refund pertaining to period October, 2008 to March, 2009 various discrepancies pointed out for which the refund denied. We find that as regard the discrepancy in the name of the appellant appearing in the input services invoice, since the appellant was earlier operating in different name and subsequently after amalgamation the name was changed therefore in our view if the invoices is bearing old that does not mean invoices was issued to some different persons but it is to the appellant only therefore only because of the different name the Cevnat credit/refund cannot be denied. Similarly, invoices raised in the name of the Deutsche Bank cannot be held invalid as Deutsche Banch is not a different entity, it is a part and parcel of the appellant company only, therefore on invoice bearing the name of Deutsche Bank Cenvat credit as well as refund is admissible. Incomplete name and description of services appearing in invoices is clerical error that does not conclude that the appellant have not received and used the services, therefore for this reason Cenvat credit/refund cannot be denied. The services rendered to the SEZ unit is not to the some different entity whereas services were received and used by the appellant only as they have their own set up in SEZ therefore for this reason refund cannot be denied. As regard the common issue in all the refund i.e. dispute of application of correct formula and re-quantification of the refund amount, the matter needs to be re-verified by the adjudicating authority for this purpose, we remand the matter to the original adjudicating authority. Needles to say, Adjudicating authority shall give sufficient opportunity of personal hearing and also allow the assessee to provide necessary working/documents as regard the correct calculation by applying prescribed formula. Appeals are disposed of by way of remand in the above terms.
(Operative part pronounced in court on 7/10/16) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 16 ST/245 to 248/11, ST/89060 to 89070/13