Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Mumbai-Ii vs M/S Wns Global Services on 13 April, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPLICATION NO. ST/CO/91186 to 91188/13, ST/CO/91040 to 91050, 91052 & 91053/14 IN APPEAL NO. ST/89046 to 89049/13 & ST/88703 to 88715/13 (Arising out of Orders-in-Appeal No. 107 to 118 & 118(A)/BPS/MUM/2013 dated 26.03.2013 & 166 to 169/BPS/MUM/2013 dated 18.04.2013 passed by the Commissioner of Central Excise & Service Tax (Appeals), Mumbai-I.) For approval and signature: Honble Mr. M.V. Ravindran, 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 : No 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?
===================================================== Commissioner of Service Tax, Mumbai-II M/s WNS Global Services Appellant Vs. M/s WNS Global Services Commissioner of Service Tax, Mumbai-II Respondent Appearance:
Shri A.B. Kulgod, Asst. Commr. (A.R.) for Appellant Shri Mihir Deshmukh, Advocate with Shri Abhijeet Singh, Advocate for Respondent CORAM:
HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 13.04.2016 Date of Decision: 13.04.2016 ORDER NO. Per: M.V. Ravindran:
All these appeals are filed by the Revenue against the Orders-in-Appeal No. 107 to 118 & 118(A)/BPS/MUM/2013 dated 26.03.2013 & 166 to 169/BPS/MUM/2013 dated 18.04.2013 passed by the Commissioner of Central Excise & Service Tax (Appeals), Mumbai-I. As also Orders-in-Original No. AC/R-34/DIV.V/DPS/09-10 dated 25.05.2010, AC/135/DIV.V/DPS/09-10 dated 21.01.2010, AC/R-141/DIV.V/DPS/09-10 dated 28.01.2010, ST/DIV.V/R-110/AAA/10-11 dated 29.10.2010, ST/DIV.V/R-114/AAA/10-11 dated 12.11.2010, ST/DIV.V/R-157/AAA/10-11 dated 19.01.2011, ST/DIV.V/R-161/AAA/10-11 dated 21.02.2011, ST/DIV.V/R-32/AAA/10-11 dated 15.06.2011, ST/DIV.V/R-94/AAA/10-11 dated 14.09.2011, ST/DIV.V/R-130/AAA/10-11 dated 28.12.2011, ST/DIV.V/R-129/AAA/10-11 dated 28.12.2011, ST/DIV.V/R-217/AAA/10-11 dated 31.03.2012, ST/DIV.V/R-316/AAA/10-11 dated 29.06.2012, ST/DIV.V/R-315/AAA/10-11 dated 29.06.2012, ST/DIV.V/R-314/AAA/10-11 dated 29.06.2012 & ST/DIV.V/R-313/AAA/10-11 dated 29.06.2012.
2. The respondent-assessee has also filed cross objection in respect of appeals filed by the Revenue.
3. The issue involved in these cases is regarding refund claim filed by the respondent before the lower authorities. The respondent is an exporter of services under the category of "Business Auxiliary Services". They were availing the CENVAT credit of Service Tax paid on various input services used by them for providing such output services, filed various refund claims as per provision of Rule 5 of the CENVAT Credit Rules, 2004 in respect of accumulated CENVAT credit of the input services used for providing export of services under "Business Auxiliary Services". The adjudicating authority has allowed part refund claim and rejected the refund claim partly. Aggrieved by such an order the respondent-assessee had preferred appeals before the first appellate authority. The first appellate authority after following due process of law allowed the appeals filed by the respondent/assessee and directed the adjudicating authority to grant refund based upon the finding in the impugned order. In the impugned order the first appellate authority has disallowed the refund claim wherein input service invoice were not available. Respondent is not in appeal against such disallowance by the authority.
4. Learned Departmental Representative would submit that the view taken by the learned Commissioner (Appeals) is contrary to the explicit provisions of the CENVAT Credit Rules, 2004. He would submit that the input service on which CENVAT credit was availed has no nexus with the output services. As an example he would submit that the CENVAT credit availed on technical and analysis services, public services which are not having any direct nexus with the output service exported. Hence, the impugned order needs to be set aside. It is his further submission that the refund is permissible in respect of services actually used for the export of goods/services and which would mean that there has to be direct and immediate nexus between the input services and export services. It is also his submission that the first appellate authority has incorrectly applied the formula mentioned in Notification No. 05/2006-CE (NT). He would submit that objective of the formula is to allocate the input credit between the export turnover and the domestic turnover which would mean that details needs to be produced from the CENVAT credit availed. The formula adopted by the refund sanctioning authority was correct and in accordance with the formula prescribed in the Notification No. 05/2006-CE.
5. Learned Counsel appearing on behalf of the respondent-assessee would take us through the various services on which CENVAT credit was availed during the period in question. It is his submission that the services on which CENVAT credit was availed were in respect of the input services which are utilised for the business activity of the appellant which is exported under "Business Auxiliary Services". He would submit that the issue is no more res integra as Hon'ble High Court of Bombay in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. 2010 (260) ELT 369 (Bom.) has settled the law as to what is input services and any activities in relation to business and held activities which are connected with the business of assessee, CENVAT credit needs to be allowed.
6. We have considered the submissions made at length by both sides and perused the records.
7. The issue involved in the appeals filed by the Revenue whether the respondent-assessee is correct in claiming the refund of the Service Tax paid on various input services which are utilised by them for rendering output services that are exported or whether these services are not integrally connected with the respondent-assessee as claimed by the Revenue.
8. The respondent-assessee is an exporter of services under the category of "Business Auxiliary Services" is not disputed. The respondent has his business premises at Vikhroli and registered with authorities as such for providing "Business Auxiliary Services". The appellant has claimed the refund of the Service Tax paid on the following input services used by them in their business premises.
Category Usage Service Tax including Cess Advertising Agencys Services Issuing Recruitment, Advertisements in Newspaper & On internet 36,050 Air Travel Agent Visa/Ticket charges 2,53,422 Banking & other financial services Processing of the payments, collecting export receivable 39,650 Business Auxiliary Services Support services availed 2,39,287 Business support services Support services for documentation 13,30,075 Providing food coupons to employees 78 Cargo Handling Service Handling of imported goods 1,05,602 Chartered Accountant Services Compliance with various statutes 1,12,064 Cleaning Services Cleaning of office premise 11,79,311 Clearing & Forwarding Agents Services Clearing of imported goods 64,601 Construction of Commercial or Industrial Building Repairs of building premises outside the office 16,027 Commercial Training & Coaching Services Providing training for employees 1,74,352 Construction of Complex Service Repair of the internal office premises 61,009 Courier Services For sending essential documents for export 3,82,426 Domestic Courier Services 1,17,872 Custom House Agent Clearing imported goods 13,818 Erection, Commission & Installation Erection, Commissioning or installation of any equipment or structure, installation of any electrical and electronic devices, Air condition ventilation, fire proofing, water proofing etc. 2,38,617 Event Management Services For entertainment of employees 89,915 Excise Excise duty paid 7,891 General Insurance Services Maintenance/Insurance of Asset & premises 89,162 For staff insurance 24,87,851 Information Technology Software Services Representation of instructions, data sound or image of a computer or an automatic data processing machine or any other device or equipment 9,98,922/-
Insurance Auxiliary Services Maintenance/insurance of asset & premises 9,497 Interior Decorators Services Consultancy or Technical Assistance relation to planning, designing of spaces etc. 5,134 Internet Telecommunication Services Internet/Telephone purpose 72,209 Management or Business Consultants Services Consultancy with respect to business operation 12,54,242 Maintenance or Repair Services Repairs of building premises outside the office 48,24,839 Mandap Keeper Temporary occupation of a mandap for organizing official function, business promotion and planning function etc. 24,642 Manpower Recruitment and Supply Agency Recruitment of employees for business purposes 24,57,133 Market Research For finding out market tends 50,213 Online Information & Database Access, Leased Services For communicating with their customers, employees, service providers etc. 1,07,986 Outdoor Catering Services For lunch/dinner of the staff on 24x7 basis 4,17,112 Real Estate Agency To arrange for new office premises at Nasik & Pune 14,294 Renting of Immovable Property Hired premises for providing medical transcription service 45,10,930 Security/Detectives Services Security to office premises 15,24,580 Storage and warehousing For storage of old documents 3,087 Technical Inspection & Certification Services Consultancy with respect to business operation 1,74,322 Telecommunication Services Internet/Telephone purpose 28,42,967 Tour Operators Service Pickup of employees from resident and client place 31,01,308 Transport of Goods by Road Use for shifting of household articles of staff 894 Video Tape Production Video shoot for business meeting and interview 16,609 Total 2,85,99,994 It can be seen from the above reproduced category of input services, these services are in relation to the business activity undertaken by the respondent-assessee which cannot be disputed, as casual perusal of the services on which CENVAT credit was availed and for the purpose of which have been utilised as mentioned in the Order-in-Original would clearly indicate that these services were in relation to the business activity of the respondent-assessee. In our view, the first appellate authority has come to a correct conclusion that respondent-assessee is eligible to CENVAT credit and claim of the refund claim needs to be allowed. The claim of Revenue that input services do not have direct nexus to the business activity of respondent-asessee is a hollow claim. This ratio of Hon'ble High Court of Bombay in the case of Ultratech Cement Ltd. (supra) in paragraph No. 27 of the judgment has clearly stated that what would be the meaning of input services as per Rule 2(l) of the CENVAT Credit Rules, 2004 which we respectfully reproduced. 27.?The definition of input service as per Rule 2(l) of 2004 Rules (insofar as it relates to the manufacture of final product is concerned), consists of three categories of services. The first category, covers services which are directly or indirectly used in or in relation to the manufacture of final products. The second category, covers the services which are used for clearance of the final products up to the place of removal. The third category, includes services namely;
(a) Services used in relation to setting up, modernization, renovation or repairs of a factory,
(b) Services used in an office relating to such factory,
(c) Services like advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs,
(d) Activities relating to business such as, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit relating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. Thus, the definition of input service not only covers services, which fall in the substantial part, but also covers services, which are covered under the inclusive part of the definition. Applying the above said ratio, we find that in the case in hand, the first appellate authority was correct in allowing the refund claims on inputs services as they are utilised for activity of the business. We find that Hon'ble High Court has been even considered the judgment of the Hon'ble Supreme Court in the case of Maruti Suzuki Ltd. Vs. Commissioner 2009 (240) ELT 641 (S.C.) and came to a conclusion, in paragraph no. 34 which we respectfully reproduce.
34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of Service Tax paid on outdoor catering services would be allowable. In short the view of the Hon'ble High Court squarely cover the input services used by the appellant in this case.
9. In view of the foregoing, we reject the appeals filed by the Revenue, the cross objection are also disposed of and hold that the first appellate authority has correctly applied the formula mentioned in Notification No. 05/2006-CE. The appeals filed by the Revenue are rejected and cross objection filed by the appellant are also disposed of.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 9 APPEAL NO. ST/89046 to 89049/13 & ST/88703 to 88715/13